Standard Life Endowment Policy

Beverley

I wonder if anyone can help me.

In July 1987 my ex husband and I took out an endowment policy with Standard Life. It was taken to go with an interest only mortgage. I believe it was mis-sold to us but I am aware that I can't do much about it as it was taken out before the 1988 cut off date. We are now divorced and it is about to be re-assigned to me. I am in the process of taking out a repayment mortgage so the endowment is no longer tied to a mortgage.

I've just received the yearly statement and contains a red alert.

The policy was taken to cover a £30k mortgage and is due to expire in July 2012.

I pay £38.80 per month = £465.60 per year

The statement says:

Total current value on 1 feb 2005 = £11,945.50
Total value on 1 feb 2004 = £11,694.00
Amount we'd pay on death = £30k
Minimum amount we'll pay at maturity = £17,294.47
These (above) amounts assume all payments are made and your plan won’t alter in the future. The total current value is what you'd get if you cashed in your plan on 1 feb 2005.

If your investment grows at 4% a year, your plan might be worth £17,294.47
If your investment grows at 5.75% a year, your plan might be worth £19,300
If your investment grows at 7.5% a year, your plan might be worth £21,700

So according to this policy statement, I paid in £465.60 last year but it only grew by £251.50

I am presuming that minimum amount paid at maturity is a cast iron guarantee so it should benefit me to carry on paying in – or am I getting it very wrong?

Ideas? Should I:
- carry on paying in £38.80 pr month?
- stop paying in but keep the policy until the maturity date?
- cash it in and invest the money elsewhere now?

All advice gratefull received

Thanks in advance

Beverly

dunstonh

Here we go again. Another flawed Standard Life projection

Minimum amount we'll pay at maturity = £17,294.47
If your investment grows at 4% a year, your plan might be worth £17,294.47

So that is saying if no more bonuses are added, you will get £17,294. It is also saying that if it grows at 4% you will get £17,294.

EdInvestor

Hi Beverly,

First may I suggest that you make sure that when the policy is assigned to you that Standard Life amends it's records to show your name as first on the policy.Otherwise the demutualisation windfall coming next year will go to your ex. :cool:

Can you tell me now much terminal bonus is left in the current value of the policy? If there is a significant amount you may be best to go now.If not, best to stay for the windfall shares and reconsider later.

Beverley

Editor wrote:

Hi Beverly,

First may I suggest that you make sure that when the policy is assigned to you that Standard Life amends it's records to show your name as first on the policy.Otherwise the demutualisation windfall coming next year will go to your ex. :cool:

Can you tell me now much terminal bonus is left in the current value of the policy? If there is a significant amount you may be best to go now.If not, best to stay for the windfall shares and reconsider later.

Thanks for that - will ensure they record the change in first named.

OK --- It says:
Current value - £11,713.10
Final bonus - £232.40

Total current value on 1 feb 2005 - these figures are not guaranteed. The final bonus is the amount that would have been paid if you had left with profits on 1 feb 2005. This bonus is designed to reflect with profits returns not already taken into account in the plan value.

Bonus added to your plan:
This year (£61.79) + Previous years (£7,482.68) = £7,544.47
Sum assured..................................................£9,750.00
Minimum amount we'll pay out at maturity...........£17,294.47

The sum assured is the minimum amount, beofre any bonus is added, which we guarantee to pay at maturity. The actual amount you'll get at maturity will be the sum assured plus bonuses and it may also include a final bonus.

Thanks for taking the time - hope this is the info you need. I'm feeling totally out of my depth with it all.

Beverley

EdInvestor

Very little TB left, so I'd definitely suggest you stay for the demutualisation windfall.

Your guaranteed value is 17,294, that's what they'll pay you if you keep paying in your premiums to maturity.In addition you'll get a DM bonus: I'm taking a guess here at 2,000-2,500 quid. You might get some small additional annual bonuses as well, so all in all around 20k is a reasonable guesstimate IMHO.

If you surrendered now at 11,945 and put this money in the bank at 4.5% and paid in all your premiums as well, you would have just over 20k in 7 years time. Much the same.

So I'd stay at least till you get the DM bonus and then reconsider: you have little to lose but the remaining small TB and you will have the free life assurance as well.