Value of endowment in real terms

mrsdumplin

Hi,


We have a very small endowment with Royal London that we are considering cashing in.


It was targeted to pay out £17k but its most recent medium projection is £13k


We have paid in £5k over 17 yrs and have been offered a surrender value of £6.5k so the investment has grown £1.5k in 17 yrs.


If we let it run its full term a further 9 years we will pay in an additional £3k making a total of £8k and pay out £13k, a further £3.5k growth on top of what we have paid in.


I'm trying to work out what the £13k will be worth in 9 yrs time should I cut my money and run now.


I've been told the policy doesn't have reversionary bonus's so I don't think this will make it attractive to sell.


Many Thanks
Mrs D

AndyT678

mrsdumplin wrote: »

I'm trying to work out what the £13k will be worth in 9 yrs time

The short answer is, it depends.

The longer answer is, in terms of purchasing power that very much depends on what you want to buy with your money and how the price of it changes over the next nine years...

If it helps, based on your numbers above, I think that your investment generates an IRR (google it if you're not familiar with the term) of about 3.75%. If you have an alternative investment that can beat that then you should consider it.

dunstonh

I've been told the policy doesn't have reversionary bonus's so I don't think this will make it attractive to sell.

It it is not a with profits plan then you can cannot sell it. If it doesnt pay bonuses then it would have to be a unit linked plan. Unit linked plans have a daily value. So, there is no need for anyone to buy at an inflated price as if they wanted those units, they could buy them at that days prices.

mrsdumplin

Thank you
x

greejag

My advice is dont sell or surrender your policy, yes it probably wont get the return you were promised, but you will be worse off longer term if you sell or surrender, get some detailed impartial advice if you unsure.

PeacefulWaters

greejag wrote: »

My advice is dont sell or surrender your policy

Are you authorised to give such advice?

Even without some sort of factfind?

amnblog

Don't forget you also have life insurance as part of the policy which you lose if you cash it in.

dunstonh

greejag wrote: »

My advice is dont sell or surrender your policy, yes it probably wont get the return you were promised, but you will be worse off longer term if you sell or surrender, get some detailed impartial advice if you unsure.

Those of us who are regulated and authorised to give advice in real life would not give that advice here on the board. What have you seen on this thread that makes your "advice" viable?

Martin_for_president

Hi,
Just to be clear up front, I am not qualified to provide 'advice' so the following is just my opinion based on years experience of dealing with banks and other financial institutions.

If you have a relatively small 'with profits' endowment policy, that is not critical to paying off your mortgage and within a few years of doing so, my opinion is that you should ditch it as fast as you can. Endowments are riddled full of unfair contract terms and with such opaque accounting to put you entirely at the mercy of the company that sold it to you. You would not believe the amount of ways they can withhold your money and try to lock you into some long term underperforming investment.

In my view if you can get out asap (probably with negligible profit) and use the lump sum to invest elsewhere you should be able to find a much better return and save a lot of complaints hassle further down the line. The only reason I could foresee keeping such a policy as you describe is if you think Endowments are going to be the next big PPI type reclaim scandal and you might potentially make money out of it that way.

But life is too short to be locked into something like that!

dunstonh

Just to be clear up front, I am not qualified to provide 'advice' so the following is just my opinion based on years experience of dealing with banks and other financial institutions.

I have over 25 years and still cant come to the same opinion as you.

If you have a relatively small 'with profits' endowment policy, that is not critical to paying off your mortgage and within a few years of doing so, my opinion is that you should ditch it as fast as you can.

Dreadful advice without knowing any facts.

Endowments are riddled full of unfair contract terms and with such opaque accounting to put you entirely at the mercy of the company that sold it to you.

No they are not.

You would not believe the amount of ways they can withhold your money and try to lock you into some long term underperforming investment.

Dont mix up the endowment with the investment...as you are.

In my view if you can get out asap (probably with negligible profit) and use the lump sum to invest elsewhere you should be able to find a much better return and save a lot of complaints hassle further down the line.

apart from when the opposite applies.

The only reason I could foresee keeping such a policy as you describe is if you think Endowments are going to be the next big PPI type reclaim scandal and you might potentially make money out of it that way.

And that isnt going to happen.

PeacefulWaters

Martin_for_president wrote: »

Hi,
Just to be clear up front, I am not qualified to provide 'advice' so the following is just my opinion based on years experience of dealing with banks and other financial institutions.

If you have a relatively small 'with profits' endowment policy, that is not critical to paying off your mortgage and within a few years of doing so, my opinion is that you should ditch it as fast as you can. Endowments are riddled full of unfair contract terms and with such opaque accounting to put you entirely at the mercy of the company that sold it to you. You would not believe the amount of ways they can withhold your money and try to lock you into some long term underperforming investment.

In my view if you can get out asap (probably with negligible profit) and use the lump sum to invest elsewhere you should be able to find a much better return and save a lot of complaints hassle further down the line. The only reason I could foresee keeping such a policy as you describe is if you think Endowments are going to be the next big PPI type reclaim scandal and you might potentially make money out of it that way.

But life is too short to be locked into something like that!

I wonder how many times you've breached the Financial Services Act and the rules of regulators in that little missive?

A fair number of inaccuracies too.