Paid off mortgage: keep or sell endowment?

SaverSarah_2

We've just paid off our Woolwich offset mortgage nine years early (yippee!!). Now our dilemma is whether or not we keep our endowment running. The policy is with Zurich (was Allied Dunbar) and has been running for 16 years. We increased our premiums 10 years ago to avoid any possible shortfall (though that's probably irrelevant now).

What might you need to know? We're paying £154 per month which is giving us life cover of £67k or thereabouts (if I remember rightly).

Cash in value is currently just over £30k.

We have life cover elsewhere (critical illness). I guess our options are to keep paying into it, though I guess we could potentially get a better return elsewhere, to cash it in through Zurich, or to sell it to a broker (if that's the right term).

I know there are some experts on this board from reading other posts, and I'd be really grateful to know what you think. I appreciate you can't advise, as such.

Thanks guys.

MickKnipfler

It's probably worth getting a forecast from them before making a decision. Generally though it's probably better to see it out.

EdInvestor

Post some info about the policy

Guaranteed sum assured
declared bonuses
Surrender value
Monthly premium
Maturity date
Maturity forecasts

U've_been_framed

Cashing it in is probably the worst option. Check how much you would get if you sold it.
Another option is to ask Zurich to class it as paid up, and cease paying any more money into it.
If you carry on paying into it, why pay increased premiums if you think that you would get a better return on your money elsewhere?

SaverSarah_2

Will get that info and post it later EdInvestor, thanks.

U've been framed: having read through some of the other posts on this board I'm not sure we can sell – I'm pretty sure it's a unit linked rather than a with-profits policy.

Yes, the paid up option is worth thinking about I guess. Increasing the premiums was purely because we were worried the plan wouldn't pay off the mortgage at the end of the term. Now it's just a question of whether we keep it going or not. It isn't that we can't afford to – you know what it's like, you pay into something for long enough you almost don't notice you're paying for it – it's just whether we'd be better off investing the monthly premium elsewhere.

dunstonh

surrendering it could be the best option, it could be the worst. We dont have the data to say one way or the other.

SaverSarah_2

EdInvestor wrote: »

Guaranteed sum assured
declared bonuses
Surrender value
Monthly premium
Maturity date
Maturity forecasts

Sum assured is £67886
It's unit linked, not with profits (so I can't sell it to a broker?)
Monthly premium £154
Maturity date is 1 May 2016
Projections:
4% £59,100
6% £69,400
8% £80,300

dunstonh

Looks like a good one. Unit linked makes it better.

6% puts it in surplus and depending on the investment funds chosen, a return around 8% is more than possible giving you 13k surplus.

SaverSarah_2

Woah dunstonh that was quick!! This is all helpful advice, thanks.

dunstonh

What are the investment funds you are in? It may be worth reviewing these as Zurich have a number and a better spread could result in better returns as well as offering some downside protection. Or you may prefer to increase the risk/reward potential.

SaverSarah_2

100% managed. Don't forget though, in one respect the maturity value is all surplus as we now don't have a mortgage for the plan to pay off. It's just whether we'd be better off taking the current value and investing it in a different way. We're not particularly risk averse – the only reason we managed to pay off the mortgage so early was through saving in medium to high-risk PEPs and ISAs over the long-term.