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

dunstonh

A LOSS OF £253.51 this month - d'oh!

Inevitable really given recent events. It could have been worse though.

My "gut" feeling is that I think we have seen the best of SL now. You have SLs bonus announcement shortly and I am not confident.

Gorgeous_George

The first day of the month and the values have changed again. The policy is now worth:

Basic value...£21,208.60
Final bonus....£4,209.91
Total...........£25418.51

So, the loss since 1st Jan is £103.37 if you include the additional £45 payment.

The annual increase works out at 11.1%

SL's forecasts have also been revised and are:
3.75%...£27,800
5.50%...£28,800
7.25%...£29,800

GG

Gorgeous_George

Well, I'm still here and the next update is due tomorrow.

Looking back at this time last year:

Feb 07....£20,210.15....£2,142.28....£22,352.43
Mar 07....£20,293.09....£2,232.24....£22,525.33


That was approximately a 7% (annual equivalent) increase. With under two years to maturity, will the rise be maintained? Find out in the next thrilling instalment tomorrow!


GG

Gorgeous_George

As of 1 March 2008 the policy has a surrender value of £25614.45 made up of:

Basic value....£21292.14
Final Bonus......£4322.31

Latest forecasts at maturity:

3.75%....£28,000
5.50%....£28,800
7.25%....£29,800

Still looking reasonably strong, if not earth-shattering, with a return of approximately 7.4%.

GG

passion8

Hello GG, dunstonh, EdInvestor, et al

Today we received our Maturity pack as the plan matures on April 19th.

We're still reading through the figures, and all the options given, (there's reams of paper!) and we still understand that the interim and final bonuses shown are not guaranteed, so that's that out of the way

I can post up a breakdown of our plan value (if anyone's interested) but the main figures are:

Target Value: ........... £17,500.00

With Profits value: .... £18,782.26


We're not sure if this is good, bad, or average, but we were in the 'red alert - high risk of shortfall' category, so when all's said and done, we think we've done ok.

Thanks again GG for opening this thread, and the best of luck with your endowment

Thanks again to dunstonh and EdInvestor for all the advice, conflicting or otherwise , that you gave so freely. It wasn't always understood, but it was always much appreciated.

dunstonh

Thanks for posting that passion8.

It is just another case of SL giving shortfall warnings on their projections before maturity but then paying a surplus on maturity. Whilst I have seen it a number of times. For those reading the forums, it is good to hear it from another source.

It does sort of make a mockery of some of the projection methods used.

In the end, you would have almost certainly paid less per month than a repayment mortgage and you have a surplus to boot (albeit smaller that you would have thought on day 1 of taking it out). So, good result in your case.

EdInvestor

We're not sure if this is good, bad, or average, but we were in the 'red alert - high risk of shortfall' category, so when all's said and done, we think we've done ok.

You have to hand it to Standard Life really. Assuming this was a normal 25 year endowment, it benefited from life assurance tax relief, which is no longer available.But even with this tail wind it has only just scraped home. To get an investor to view this pathetic performance as Ok is quite an achievment.

To remind, endowments were sold on the basis they would pay off the mortgage AND give a substantial lump sum in addition - big enough to buy a car, take a cruise, get a new kitchen etc.

So a return which covers the mortgage with a small additional amount represents a failed endowment, compared with the forecasts and expectations when it was sold.So this policyholder has actually done very poorly .

It is just another case of SL giving shortfall warnings on their projections before maturity but then paying a surplus on maturity. It does sort of make a mockery of some of the projection methods used.

Not so: even if the eventual result of the endowment at maturity is the same as the result the investor would have got by surrendering early and paying down the mortgage, the latter course of action is always preferable, because there is no risk.
If you're going to take a risk you want a better return.Not the same return, or a lower one.

Endowments generally don't now do what they said on the tin when they were sold.But I will give credit to SL for skills in the spin area, for persuading punters that things turned out all right in the end when they demonstrably did not.

dunstonh

So a return which covers the mortgage with a small additional amount represents a failed endowment, compared with the forecasts and expectations when it was sold.So this policyholder has actually done very poorly .

An endowment of that period would probably have required a target growth rate of 11%p.a. So hitting target and paying a surplus means it has grown by more than that.

Not so: even if the eventual result of the endowment at maturity is the same as the result the investor would have got by surrendering early and paying down the mortgage, the latter course of action is always preferable, because there is no risk.
If you're going to take a risk you want a better return.Not the same return, or a lower one.

If passion8 had not done the endowment they would now be £1282 worse off and would have paid approx £10pm more on the monthly cost of the mortgage (assuming 25 years). Thats a further £3,000.

Only you could find fault in someone being better off by around £4282 because its an endowment policy.

passion8

Nothing changes with you two does it?

EdInvestor.

I have to admit that there were times when we seriously thought of surrendering, selling, or whatever it is people do with something that appears to be under-achieving. There were hints of a lot of the things you mentioned, nice car, holiday etc, but there was something about dunstonh's confidence that made us stick with it. I know some people will think we were crazy, and even though we're far from skint (yet ), that letter made us breathe a sigh of relief. We'll probably never know what we could have gained or lost, but thanks for the reply

dunstonh - thanks I posted it in the hope that people would read it and possibly think again about jumping ship and surrendering or selling, or doing anything hasty really.

(But don't take my advice anyone ... I know nothing!)

Dick_here

I can see what both Ed and dunston are saying here.

In pure cash terms, passion8 has done well from the endowment. It's just that it seems poor as it was sold as a dream that a large lump sum would pay out at the end.

I guess it comes down to how much thought you'd given to what you were going to do with the lump sum, that either makes you feel happy or disappointed.