Endowment value over figure set to repay -

Amanda65

should we cut and run or hold on in there?

Bit of background, OH and I took out a mortgage in 1988 and were persuaded to take out an endowment policy to, and I quote 'repay the mortgage, see any children through university and probably have the holiday of a lifetime'. As we all know, that wasn't quite accurate and although we had looked at changing it over the years were never financially in a position to do so and decided we would have to see where we were when it matured and re-arrange our finances accordingly to repay the remainder of our mortgage (which has increased since the original loan as we moved then had an extension). The original policy was taken out with Regency Life, who sold out to Windsor Life and our policy is now owned by Re-assure.

Roll forward 24 years and 7 months and I telephoned Re-assure today to get some idea of what happens in September and how far out the payment will be from the £73k it was supposed to cover. The lady on the phone told me if we cashed the policy in today it would be worth £78.5k :T:T:T

Obviously I was delighted as we have spent the past 10 years getting 'red alert letters however I am now in a quandry as I don't know whether to cut our losses and take the money or hold out until September. She was unable to advise me if there was an early redemption policy or if there was a bonus that would not be paid if we don't stay in to the end but said she would find out and come back to me. She also said she will get a forecast figure sent to me as it wasn't available on her screen due to it being less than 6 months to the end of the policy.

I know no-one will be able to tell me if the policy will go up or down in the next 5 months (and if they could they would be a very rich man ) but would be interested in opinions as to what you would do. I don't want to lose out on any potential increase but equally be gutted if it goes down before maturity.

Thrugelmir

If its a with profits policy. Then holding out until September will result in a better payout. As the policy running its full term is beneficial.

Amanda65

Thrugelmir wrote: »

If its a with profits policy. Then holding out until September will result in a better payout. As the policy running its full term is beneficial.

Thanks will look into that.

kingstreet

If it's an old Windsor Life contract, chances are it's unit linked. The value of your savings is directly linked to the change in the value of underlying investments, such as gilts and stocks and shares.

The value can, and will, fluctuate on a daily basis. You can request a switch into cash, while you decide what to do. This is a "holding" fund where the volatility of equity markets is avoided.

Other than the contributions which will be invested in the few months you have left, you may wish to investigate the idea of surrender now to maximise your return.

Talk to the provider to establish the contract type and if you can switch into cash to consolidate your value while you decide what to do.

Thrugelmir

Amanda65 wrote: »

Thanks will look into that.

Information can be found here.

https://www.reassure.co.uk/customers/windsor-life/my-funds/Pages/welcome.aspx

Amanda65

Phoned again this morning and was advised that it's not with profits but is unit linked and does have a bonus for 'staying the distance'. I have requested a letter outlining our options as the lady on the phone was unable to give any further advice.

kingstreet

That's unusual. Terminal bonus is usually applied to with-profits contracts, not unit linked.

However, you'll need to consider the information they send you and work out if this bonus could be eroded by general market falls. The switch into cash could allow you to consolidate gains, minimise/remove the risk of future losses and still see you get this bonus at maturity.

Amanda65

I'm not entirely sure that the telephone information is correct so will wait for the post to arrive. We have another small policy with them that was due to cover an additional £2.5k next May (yep bought another endowment policy for new windows!!) and which according to their most recent forecasts will pay out £861 was yesterday valued at £864! I asked why I would pay another £60 between now and then to potentially receive £3 less in a years time and the lady said "ooh looks like we're got our figures wrong, I'll get those adjusted". It didn't fill me with a lot of confidence tbh!