Selling A Norwich Union Endowment Policy

Towner_2

Hi Edinvestor, thanks for the reply. The offer is from Oakwood themselves, they are the buyer. Sorry, but could you have a look at my other post a couple down from this one entitled 'Another Endowment Question' and hopefully know the answer!!! Thanks again.

Towner_2

Lokks like Oakwood are the highest bidders at £8905, by default though as no one else has offered!!! What do you guys think, should I or should'nt I...........

EdInvestor

Have you received any maturity forecasts yet?

Towner_2

Hi EdInvestor, sorry for the late reply. I have been sent maturity forecasts and it is not going to perform. Would you like to know what they forecast?? If so these are at home and will post them later.

dunstonh

How do you know its not going to perform? Have you added the final bonus and mortgage promise values on top of the projections?

I tend to find that most NU policies are heading for a surplus or getting really close to required amount.

Towner_2

I don't know for sure if it will perform, can only go by the forecasts!!
4% = 22100
6% = 27500
8% = 34400

dunstonh

They are not forecasts. They are projection examples. NU are likely to be around the 4-6% mark. However, the current terminal bonus needs to be added to that along with the mortgage promise value. Otherwise the projections are not taking the full amount into account.

It is a flaw of the projection system which was never designed with conventional with profits policies in mind.

Looking back on the thread it appear your target amount is £35,000.

The 4% projection will pay £22,100 plus £2664 terminal bonus plus MPV of £5908. Giving you a total of £30,672

The 6% projection will pay £27,500 plus £2664 terminal bonus plus MPV of £5908. Giving you a total of £36,072. However, that will be reduced to £35,000 as MPV is reduced as target has been hit.

Notes: The terminal bonus is not guaranteed. It can go down as well as up. However, adding it to the projection with its current value gives a better than nothing projection. Remember that many NU endowments have put more than 10% a year on in recent years. Mostly down to the terminal bonus going up again.

I would be relatively comfortable with the estimate that the policy will hit £35k due to terminal bonus and MPV.

EdInvestor

With only a 7% premium on offer from one TEP trader I would doubt there is any real hidden value in this policy.

Towner_2

Thanks once again for all your valuable comments. As mentioned before I have a loan with about £7000 left on it (£300 pm 2 yrs left) and would like to lose this payment every month to ease the monthly outgoings. The only way I can do this is to sell the endowment but looking for reassurance that I am doing the right thing without potentially losing a load of money in the long run!!!!

dunstonh

The other thing to remember is the orphan assets dispersal. If you sell it, the person buying it gets that payment.