Selling A Norwich Union Endowment Policy

Towner_2

Just called NU to find out a surrender value for my endowment policy. I was told that by the end of the year certain policies would be eligible for something called 'Re-attribution'
Now I am not sure if I was directed to a call centre overseas but the lady did (or could) not explain it very well!!! I did re call them but again it was overseas and again it was not very well explained!! They did mention that I may get some money but could not say how much or why!!
Any details or a better explanation of this Re-attribution would be much appreciated. Thank you.

EdInvestor

This is to do with a possible windfall related to orphan assets.It affects former Commerical Union and General Accident policies.

Towner_2

Thanks EdInvestor. I am sure that my policy has always been with Norwich Union, not those mentioned above. The lady at NU said she would check my policy was included and then said yes it was. As mentioned looking to sell this as need the money but do not want to shoot myself in the foot. Does anyone have any idea what to expect and when money wise or is it a 'how longs a piece of string' question!!

dunstonh

CGNU with profits plans qualify. If you are in the CGNU with profits fund then you should be fine.

Also, note that most NU endowments do not include the terminal bonus and mortgage promise value in the projections. The special bonus obviously isnt included either. NU projections do tend to understate the real position of the endowment.

The special bonus is estimated between £300 and £1000 depending on what you read and what your policy value is.

Towner_2

Hi DunstonH, Bear with me on this!!! What you are saying is:
1: Norwich Union will pay out between £300 - 1000 by the end of the year to all qualifying policy holders.
2: I will not get this bonus (or a percentage of it) if I sell my endowment now.
Questions:
Will this bonus be added to my policy when it matures or will it be a cash handout now??
If I do sell will the new owner of the policy qualify for the bonus??

Sorry for all the questions. Thanks.

dunstonh

1 - the special bonus amount is not known but expected to average around £300-£1000. That info will come in time. Payment may not be this year but 2008.
2 - If you sell now, you will not get a penny. The person buying the plan gets it.

The payout will be in the form of a special bonus added to the annual bonuses in the plan. Effectively increasing the maturity value.

Towner_2

Thanks DunstonH, Thought I was in line for a cash bonus now!! If they are just going to add the special bonus to the payout when the policy matures then I will sadly have to sell the endowment now. Will this extra bonus make the policy much more attractive to an Endowment Purchasing Co??

dunstonh

Will this extra bonus make the policy much more attractive to an Endowment Purchasing Co??

Very much so. Just as the mortgage promise value adds to it as well. That can be worth quite a few grand more than the projections show.

Towner_2

Mortgage Promise Value?? Think I may have missed something important here!! What exactly is that??

dunstonh

in 2001, NU gave a promise value on their statements. This was watered down later to stop it increasing but you will get the 2001 promise value (recapped on 2004 statements).

You only get the promise value is there is a shortfall. Not if it hits target.

So, example using target value was £30,000 and mortgage promise value was £2200:

If maturity value is £31,000 you get no extra.
If maturity value is £28,000 you get £2000 to make up the shortfall
If maturity value is £25,000 you get £2200 which is the maximum promise value.

Check your 2001 or 2004 bonus statements which should give you the mortgage promise maximum value.

EdInvestor

Info on the orphan assets here:

http://www.policyholderadvocate.org/

IIRC only people who had a shortfall at a specific point years ago (around 2000-01) are eligible for the endowment promise.If your shortfall developed later and you don't know about it, perhaps you aren't on the list.

Get a quote from the TEP traders, that should give you an idea if there's much "hidden value" in the policy.

https://www.apmm.org