Standard Life - How much will my policy be worth tomorrow?

Gorgeous_George

I logon to Standard Life (clicky). You will need to register first and this take a few days. Worth doing IMO. I do the same with my Friends Provident policy.



GG

EdInvestor

Have you received your additional payment from the estate yet GG?

If so how much was it?

http://news.independent.co.uk/business/news/article2823109.ece


This would need to be deducted before you had a real idea of the y-o-y increase in the surrender value as it's a one-off.

Gorgeous_George

I don't think so Ed, first I've heard of it.

I have had my policy since Feb 1985 and pay £45 per month. I don't expect the additional payment to cover dinner for two at my favourite restaurant. Still, better in my pocket than theirs.

If my policy continues to increase in value at about 7% it will have done quite well considering the 1105 free shares (+ 101 bonus shares) that I have also received. Whilst the seller of the policy intimated a £30K surplus, I'd sooner have £10K and the low inflation of the past 20 years than £30K that would have bought less if inflation had been similar to the 25 years to 1985.

If only I could have claimed in the great mis-selling scam. I haven't even paid bank charges so I can't claim for that either. Life sucks, doesn't it?



GG

EdInvestor

It was only announced yesterday (though hinted at in the past.The extra payments will be credited at maturity, surrender or transfer so should show up in any new surrender value.

Gorgeous_George

Today (1 Sep 07) the policy has a surrender value of £24,831.51 (basic value £20,791.68 and final bonus £4,039.83). I make that a return of well over 11% tax-free over the last 12 months which sounds good but the policy was worth £24,149.66 in Jan 2003.

Projected values at maturity are £28,100, £29,200 and £30,400.

With the market turmoil that we are experiencing at present, should I bale out now and lock in that £24K? Or has the FSA's rules (that lead to the endowment problems of recent years) shielded me from over exposure to a potential (if unlikely) stock market crash?



GG

EdInvestor

Gorgeous_George wrote: »

Today (1 Sep 07) the policy has a surrender value of £24,831.51 (basic value £20,791.68 and final bonus £4,039.83).

Compared with last month:

Basic Value...£20702.46
Final Bonus...£3963.60
Total.............£24672.06

August forecast maturity values
01/08/2007...£28,000...£29,200...£30,400

Now: £28,100, £29,200 and £30,400.Virtually no change, contributions are balancing market falls.

With the market turmoil that we are experiencing at present, should I bale out now and lock in that £24K?

Tell me again GG, what interest rate are you paying on your mortgage?

Gorgeous_George

EdInvestor wrote: »

Compared with last month:

Basic Value...£20702.46
Final Bonus...£3963.60
Total.............£24672.06

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Now: £28,100, £29,200 and £30,400.Virtually no change, contributions are balancing market falls.




Tell me again GG, what interest rate are you paying on your mortgage?

Hi Ed

At least the virtually no change is virtually upwards

I pay BR +0.74% (6.49%) on my Britannia off-set mortgage (and BR +0.89% on my BTL with NatWest)).

I'm not sure if my running commentary on my SL policy is useful information for the experts out there but I shall continue anyway.

GG

EdInvestor

If you took the surrender value and used the money to reduce the loan @6.49% and increased the mortgage payment by the endowment premium to maturity, your total return would be 31,775, higher than the target i believe?

Doing the same with the BTL mortgage would result in a return of 31,906.

Obviously these are guaranteed returns, no risk involved.

Hard to see why you would bother holding this policy in the absence of health issues affecting the life cover, in that you are taking a risk to achieve a projected result lower than what you are guaranteed to get by using the same money and not taking a risk.



Re the turmoil I assume GG is referring to the falls in the markets due to the sub prime/credit crisis.While I suppose you could say that this is property related in that the problems derive from US housing loans, the real difficulty is in the way the banks have used these structured derivatives to split up risk and sell it off , so nobody knows who is exposed: hence all the banks are under suspicion and all have suffered share price falls.By splitting it up and parcelling it off, it could well be that the risk is reduced because nobody holds too much of it, but we don't know, and markets hate uncertainty.

I do agree it's likely that the problems will be resolved - the situation is not unlike the commodities/emerging markets risk problem that needed to be sorted in May last year.

Nevertheless this sort of thing doesn't help endowments coming up to maturity with a fixed target to meet, though it's neither here nor there for people starting out saving.

Gorgeous_George

Hi Ed

Thanks for that. I appreciate your input. My spreadsheet gives similar figures but I live in hope of better returns than those forecast by SL. Maybe nearer £35K?

Maybe I'll ask AAP to revalue it and see if I can squeeze a bit more out of the policy. I might just let it go as it will help me clear my mortgage before I hit 50 and I should be able to retire before I'm 55. If only work would offer redundancies again.



GG

EdInvestor

Why not cash it in and put 7k in your S&S ISA in some decent funds where you can hope to double the return (at least) and use the rest to reduce the mortgage?

There's no problem about taking a punt but using an underperforming endowment to do so just doesn't make sense to me.