Endowment review

Pobby

I am not needing this endowment to settle my mortgage but I am using it as a savings plan.The little that i know about endowments would suggest that this is a pretty unexciting policy.Taken out with Scottish Life in 1988 the details are as follows.

Monthly payment £107.Policy is due to end in 2013.

Basic benefit £19,200
Total bonuses now declared £,10,08o
Basic benefit plus declared benefit £29,280
Death benefit £60,000

Asset split
equities 23%
property 8%
fixed interest 68%
cash 1%

No idea what,if any,the terminal bonus might be at the end.Any ideas please?

Pobby

Just phoned the company and the policy is valued at a touch under £26k if surrendered.Current terminal bonus is 34%.

EdInvestor

You need to get some maturity forecasts from them to compare.

If you surrendered the policy and saved the lump sum in cash, also paying in the premiums to maturity and achieved a net return of 4%, you would get 41,598.

If you invested it and got a 6% return the total would be 46,126.

See what they are forecasting for a 4% return - that's the maximum that fund is likely to get with such a low equity content.

Of course the policy does include life cover, so you might need to factor in replacement cost for that.

dunstonh

You need to know the cost of replacement life cover. That then needs to d deducted from the endowment premium and that projected forward. If you dont include the cost of life cover then any DIY projection is flawed and will always beat the endowment.

Some Scot Life plans allow switching to unit linked funds and that ought to be checked out as well as they offer greated potential. Plus a switch now would protect your terminal bonus accrued to date.

pjala

Shop around for a better figure for cashing it in, I got around 17% more by going to a TEP company. If you get quotes from them, then you have a more realistic investment figure to start off from.

EdInvestor

For sale quotes:

https://www.apmm.org