surrendering ur endowments

Belfastbelle

Should we keep Standard Life w/profits endowment then?

dunstonh

Are endowments still sold with new mortagages?

No. You still get investment linked mortgages but they use ISAs now.

What does the forum think of the future on endowment shortfalls?

It depends on the endowment and where you have your money invested. An endowment is just a tax wrapper. It doesnt make or lose money. It is where the money is invested that matters. If you have good investments, you will probably see a surplus. If you have bad investments, you will probably see a shortfall.

CM issued endowments in both unit linked and with profits form so it is impossible to give any comment on a CM policy without knowing something about it.

EdInvestor

Post some info about the CM policy

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

Interest rate you are paying on your mortgage.

Belfastbelle

figures are updated - keeping for a while

dunstonh

what is the terminal bonus currently on the plan?
do the projections include any terminal bonus currently accrued (they dont normally)?
what is the cost of replacement life cover?

ritac1

I am trying to sell my endowment with Standard Life. I started it in 1988 and it matures in 2013. I have no mortgage but do need some extra cash to pay off other debts etc.

When I started it in 1988 it was known as a "with profits endowment" with a sum assured for £30,000.

Current surrender value according to S Life is:

Basic Value: 12917.69
Final Bonus: 1172.93
Total plan value: 14090.62

I pay £37.90 monthly

Sum assured: 9750.00
Bonus added: 7064.32 (This years bonus £59.40)
Minimum to pay at maturity: 16814.32


I recently gave all the details to APMM and had a few offers. The best one appeared to be from Foster and Caulfield (I think) who offered between 14880 and 15330. I sent off all the necessary details and have heard from them this morning, they returned all the paperwork and advised they cannot deal with my policy since it is an Early Maturity Plan.

I have looked back through all my paperwork from Standard Life and it seems that the policy has had a number of different titles, i.e.

originally With Profits Endowment
Policy Loan
Minimum Cost Plan
and now
Early Maturity Plan
Minimum Cost Plan (80) - Early Maturity.

I wondered if I go with one of the other offers is the same thing likely to happen and is there something unusual about an 'Early Maturity Plan'?

EdInvestor

Belfastbelle wrote: »

Maturity forecasts
4% 7890
6% 8930
8%!! 9970

Let's say you surrender the endowment and use it to pay off a mortgage loan (or save it in an account) at a 5% return, also paying in the monthly premiums. At maturity you would have achieved a guaranteed return of 8033. This is higher than the unguaranteed low-end forecast for the CM fund - which IIRC is the appropriate one to use.

Even if the CM fund does a bit better than that, the risk premium has virtually disappeared.

If you need to replace the life cover the cost of that should be taken into account, but it is very cheap these days.

Belfastbelle

replacement life cover is about £35 pm month (inc critical illness).

JoeK_3

EdInvestor wrote: »

Let's say you surrender the endowment and use it to pay off a mortgage loan (or save it in an account) at a 5% return, also paying in the monthly premiums. At maturity you would have achieved a guaranteed return of 8033. This is higher than the unguaranteed low-end forecast for the CM fund - which IIRC is the appropriate one to use.

Even if the CM fund does a bit better than that, the risk premium has virtually disappeared.

If you need to replace the life cover the cost of that should be taken into account, but it is very cheap these days.

I have not seen one simple comparison on this site that shows the advantages of surrendering an endowment, as apposed to continuing with it.

Such a comparisons would have to include the following:

1) Paying the surrender value off the mortgage loan amount.

2) Over paying the previous endowment monthly premium into the mortgage.

3) Comparing the cost of the replacement loss of life/critical
illness insurance.

4) Projected endowment returns based on investment mix both now and in the future.

5) Projected mortgage interest rate for the remaining mortgage term.

Or continuing with the endowment

When people on here can demonstrate that the comparison has been completed and a surrender is advantageous in monetary terms, I will support it 100%.

JoeK

JoeK_3

Existing endowment premium = £14.79 pm
Cost of new life/critical illness insurance = £35.00 pm
Increase = £20.21 pm

As it would cost you a further £20.21 pm to buy inferior protection, (if you disposed of the endowment) you could consider keeping the endowment, overpay your existing mortgage by the proposed increase of £20.21 pm.

Ask your lender to calculate the effects of this overpayment for the next six years.

JoeK

EdInvestor

Does the existing endowment include critical illness cover?