Aviva Endowment - Cash in or keep

guy.pennington

Hi all,

I would appreciate your thoughts on if I should cash in or keep my Aviva endowment ?

Matures 10/03/2016
Surrender value £20688 as of 10/03/2014 (was £17371 12 months ago). Offer of £21722 from Surrenda-Link today.

Aviva estimated maturity projections as of 25/01/2014:
£22200 at 1.4% growth
£23100 at 3.4% growth
£24200 at 5.4% growth
There is no Aviva 'promise' amount to add to this.

Sum assured is £17189
Bonus to date is £2329 (bonus for 2013 was just £11)
For info, the last declared final bonus as of 31/12/2013 was £260 per £1000 of sum assured for policies similar to mine according to Aviva (I asked them today).

If I pay the £21722 off my interest only mortgage I will save £1147 over the next 2 years in interest payments at 2.64%.

The endowment premiums that I will save over the remaining 2 years comes to £1853 (£77.22 per month).

So £21722 + £1147 + £1853 = a total value to me of £24722 if I cash in now and pay the lump sum and monthly premiums into my mortgage account.

This value of £24722 is more than the Aviva predicted maturity rate of £24200 at the highest 5.4% growth estimate, so it seems like I should cash in now

OR

Am I missing something ?

Any thoughts or opinions welcome ?

kipperkendall

As Aviva is various companies, what was the original endowment product?

I have an Aviva CU home maker with profits and my final bonus is a percent of the sum assured and the bonuses combined. I also get a promise amount.

I found the forecasts a waste of time as they didn't relate to the actual make up of the endowment. Maybe that's because mine is with profits.

guy.pennington

kipperkendall wrote: »

As Aviva is various companies, what was the original endowment product?

I have an Aviva CU home maker with profits and my final bonus is a percent of the sum assured and the bonuses combined. I also get a promise amount.

I found the forecasts a waste of time as they didn't relate to the actual make up of the endowment. Maybe that's because mine is with profits.

It's a Norwich Union Minimum Cost Endowment

guy.pennington

guy.pennington wrote: »

Hi all,

I would appreciate your thoughts on if I should cash in or keep my Aviva endowment ?

Matures 10/03/2016
Surrender value £20688 as of 10/03/2014 (was £17371 12 months ago). Offer of £21722 from Surrenda-Link today.

Aviva estimated maturity projections as of 25/01/2014:
£22200 at 1.4% growth
£23100 at 3.4% growth
£24200 at 5.4% growth
There is no Aviva 'promise' amount to add to this.

Sum assured is £17189
Bonus to date is £2329 (bonus for 2013 was just £11)
For info, the last declared final bonus as of 31/12/2013 was £260 per £1000 of sum assured for policies similar to mine according to Aviva (I asked them today).

If I pay the £21722 off my interest only mortgage I will save £1147 over the next 2 years in interest payments at 2.64%.

The endowment premiums that I will save over the remaining 2 years comes to £1853 (£77.22 per month).

So £21722 + £1147 + £1853 = a total value to me of £24722 if I cash in now and pay the lump sum and monthly premiums into my mortgage account.

This value of £24722 is more than the Aviva predicted maturity rate of £24200 at the highest 5.4% growth estimate, so it seems like I should cash in now

OR

Am I missing something ?

Any thoughts or opinions welcome ?

Can anyone offer any thoughts before I take the plunge ?

silvercar

I posted something similar, though my mortgage promise tilts the balance in favour of holding.

http://forums.moneysavingexpert.com/showthread.php?t=4924574

It has been pointed out to me in the past that there is also a value in the life insurance the policy gives you. Whether this is important to you or not depends on your circumstances.

guy.pennington

silvercar wrote: »

I posted something similar, though my mortgage promise tilts the balance in favour of holding.

http://forums.moneysavingexpert.com/showthread.php?t=4924574

It has been pointed out to me in the past that there is also a value in the life insurance the policy gives you. Whether this is important to you or not depends on your circumstances.

Thanks for this link, I missed it when looking myself.

On balance I think I am going to cash mine in.

kipperkendall

The only thing that puzzles me about cashing in an endowment is that companies have been set up to buy them and therefore there must be good profits in buying them.

If they pay you £21772 I assume they continue to pay it and get the funds in 2016?

I know with my endowment aviva quoted a surrender value a year or two before maturity and when it matured there was a massive positive difference.

All I would say is talk to aviva and ask exactly what the final figure at maturity is made up of. I found them really helpful, they gave me examples as if it was maturing today just for reference and things looked much better.

The red letter examples were useless and completely wrong!

kipperkendall

Just as a quick example, my aviva with profits pays out this May and should deliver £69,000.

12 months ago the surrender value from aviva was £52,000

guy.pennington

kipperkendall wrote: »

Just as a quick example, my aviva with profits pays out this May and should deliver £69,000.

12 months ago the surrender value from aviva was £52,000

wow that is a big difference !

Out of interest how does your £69K expected payout compare to the original Death Benefit, and how long was your policy for, just for comparison, mine is a 20 year policy with a DB value of £27950.

Thanks for all your data, it very useful to have something to compare to.

kipperkendall

Target was £75,000

Taken out 1998 so 16 year endowment. Mine was a commercial union homemaker, final bonus rate is 21% of sum assured and bonus - final bonus has gone up and down over last few years, 15% last year I think.

I will also got a mortgage promise of £10,000, all due in May.

Two years ago I thought I was really stuffed on endowments but called aviva and asked for full details and illustrations of what final payment would be made up of. Glad I did as the red letters were inaccurate!

Hope that helps.