Should I sell these 2 endowments?

MoneyDreamer

Goood morning gentlemen,

I'm hoping some of the experienced posters on this forum could help me to decide what to do with two Norwich Union 'with profit' endowment policies I have.

The details of the policies are:

start: Jul 1994
end: Jul 2017
Sum assured: approx 31500 at todays date
Basic sum assured: 27400
Premium: 100 per month
Bonus: 5000 @ 31/12/05

Surrender value: 20100 as at 27/6/07

Offer: None yet but checking through APMM



start: Aug 1992
end Aug 2017
Sum assured: 50k minimum
Basic sum assured: 17600
Premium: 63.56 per month
Bonus 4900 as at 31/12/05

Surrender value: 15600

Offer: None yet checking with APMM

I have no house (!) and am intending to emigrate and so want to cash in these policies and take the cash with me and buy a cheaper house abroad for cash, which is what I originally hoped these policies would allow me to do here [obviously not now]. Are there any tax implications if I do sell these 2 policies and temporarily stash the cash in ICICI?

dunstonh

What are the current terminal bonuses on each plan?
What are the mortgage promise values on each plan?
What are the projections?

You will also need to supply newer figures than dec 2005 as there has been a lot of movement upwards since then.

EdInvestor

MoneyDreamer wrote: »

Are there any tax implications if I do sell these 2 policies

No.

Call up NU for some updated maturity projections, can't really give a view otherwise.

MoneyDreamer

Thank you for the replys. I've called NU and they will send new projections in the post as they say they must calculate them manually?

However the current bonus amounts for the policies as of today are:-

For the first policy £5140. Final bonus amount £270/£1000 sum assured.

For the second policy £4905. Final bonus amount £330/£1000 sum assured.


I have got a Red Alert projection for the second policy, from Aug 06, taking into account actual performance up to 31/12/05. NU's view at that time was that with profit fund should earn 5.4% after tax

At 4% growth final payment £30100. Shortfall £19900
At 5% growth final payment £33000. Shortfall £17000
At 6% growth final payment £36200. Shortfall £13800

I'll get back with the new figures once I receive them.

PS dunstonh I'm not sure what this means 'What are the mortgage promise values on each plan?' Is this something that NU would be able to tell me?

dunstonh

PS dunstonh I'm not sure what this means 'What are the mortgage promise values on each plan?' Is this something that NU would be able to tell me?

They can tell you or you can look at your 2001 or 2004 bonus statements where they gave you the amounts. That figure needs to be added to the projection (to a maximum of the target amount).

You also need to add the final bonus onto the projections as the final bonus is not included in the projections.

Ignore the red alert bit. Norwich Union only had red and green. They stopped using amber. So, if it was falling short by 1p, it would be red.

MoneyDreamer

An update on some of the amounts I've been offered by various companies if I were to sell these two endowments.

For the first endowment I have received offers so far of £21727 and £22130.

For the second, more popular, endowment I've so far received five offers ranging from £16820 to £17819.

Still waiting on the NU to come back with projections.

I was thinking that if I sold for the two higher amounts and put the money in a savings account at 6% for the next 10 years and add the £1962 per year I won't be paying in to the policies as well, then after compound interest I would more than double the £39949 surrender value.

Of course I probably won't keep the money in savings for that length of time but it illustrates the possibilities.

MoneyDreamer

I've some further information from the NU,

For the first policy -

Sum insured is £26400
Total regular bonus to date £5100
Total guaranteed payout £31500
Final bonus £7100
Total payabe on death would be £38600


At 4% growth final payment £42300.
At 5% growth final payment £46000.
At 6% growth final payment £50000.


For the second policy -


Sum insured is £17600
Total regular bonus to date £4900
Total guaranteed payout £22500
Final bonus not givenTotal payabe on death - not given

At 4% growth final payment £30600.
At 5% growth final payment £33300.
At 6% growth final payment £36300.

Mortgage promise amount max £11700 assuming 6% growth of free reserves

dunstonh

First one is a good endowment. Second one is not as good but not that bad.

First one has a target of £38,600. You are already have a guaranteed amount of £31,500 plus the final bonus which puts you in a current position of £38,600. So, currently it is on track to hit target even if there was no more growth. This one appears to be heading for a surplus.

The second one is off target on the projections but if you add hte mortgage promise value to the projections you get much closer to the target amount. You havent got the current final bonus but that could be enough to close the gap. This one is highly unlikely to pay surplus as the mortgage promise value is reduced to the target amount if over as its a maximum of £11,700. However, it stands a very good chance of hitting target.