Standard Life Endowment Policy.

ianm41

Hello to all you out there.. just wondering what to do....

This is my policy...matures 1 mar 2012.....started 1 mar 1987
Target amount £17500
Lastest statment 1feb 2005
Current value...£7319.....VALUE 2004 £7179
Monthly payment £22..or £264 a year...which means it only went up £140 in the last year.
so...should I cash it in and pay it off my mortgage...which is currently standing at £14258...with Egg straight repayment vairiable rate currently 5.74% I pay £400 a month so way overpaying it as I want rid of it as soon as possible or keep it going till DM..or leave it till maturity bearing in mind that even if it grows in value by 7.5% a year it will only realise £12700.
this policy is not tied into my current morgage in any way...so what do you think?..what should I do with it?...thanks for taking the time to read this...cheers Ian

carnet

I presume this is a With Profits policy and, if so, there seems little point in doing anything until you receive your DM "windfall", scheduled for 2006.

After that, if you don't need it to help pay off the mortgage on maturity in 2012, you could sell it via one of the many market-makers or auction it which, hopefully, should realise a bit more than merely surrendering it back to SLAC.

Alternatively you could make it "Paid-up" ie stop making any further payments into it and just hold it until maturity as an investment which will likely realise a fairly decent return (especially if and when markets pick-up) vis a vis other savings vehicles, given that the majority of the charges have already been paid in the early years.

HTH

NOT INVESTMENT ADVICE.

EdInvestor

Hello Ian

Can you post the value of the guaranteed sum assured and the attached declared bonuses so far? Do you have any terminal bonus left in the policy (unlikely)?

Need these figures to assess whether it's worth staying to get the DM bonus.For some people it might not be.

Compensationitis

Put a claim in through the online system at the court service.

I'm doing that as we speak.

ianm41

hi Editor I hope this is what you mean...
Bouns added to plan.. £4626
Sum assured £5688
TB..I have no idea it does not mention it on the statment
does this help?

EdInvestor

Hi Ian

If you surrendered it now and put the S/V into the bank @4.5% and paid in the premiums as well, by the maturity date you would have 12,128.

By contrast the guaranteed value is 10,314, this is the minimum you will get on maturity as long as you keep paying in. This might rise by about 1% compound a year, probably not a lot more. Forget about terminal bonuses.

Now what might you get at the DM? A basic 500 quid for loss of membership plus a further variable rate of (guesstimate) 15-25% of policy value. I'd have thought overall 2k is a reasonable expectation, though this is not certain.

On balance IMHO it's worth staying as the combination of the guaranteed amount and the windfall should be much the same as investing the surrender value - and could be more. In addition you have "free" life cover included.

ianm41

Thanks Editor...great information..I did not realise the DM bonus would be around 2k I figured around 1K...so what I think I will do is keep it till DM and then cash it in total of around 9.5K ish...and pay it off my mortgage as it is at 5.74% at the moment which would mean my mortgage will be just about paid off in a year or so.... btw do anyone know when the DM is taking place?

EdInvestor

Hi Ian,

THe DM vote should be at next year's AGM, so late April, with the float following in June or September depending on stockmarket conditions. The state of the stockmarket will also have a strong effect on the size of the windfall, and this should be getting clearer closer to the time. So don't quote me on the amount now But for a smallish policy, the risk of staying is pretty minimal,even if the windfall is at the lower end of expectations, so IMHO it's a worthwhile punt.

dunstonh

Expectations are that the average payout will be £1100. However, the size of the investment in the with profits fund will have a lot to do with it. The figures given out 3-4 years ago were when the stockmarket was high and Standard Lifes asset value is much lower now than it was then.

EdInvestor

dunstonh wrote:

Expectations are that the average payout will be £1100. However, the size of the investment in the with profits fund will have a lot to do with it. The figures given out 3-4 years ago were when the stockmarket was high and Standard Lifes asset value is much lower now than it was then.

This is true, but IMHO "average payout" is a completely meaningless idea.
Everyone should receive a flat rate bonus of 500 pounds worth of shares for loss of membership and then a variable rate bonus based on size of fund and length of time you have been a member.

In 2000 the figures mentioned were 6k average windfall,which consisted of a 500 quid flat rate and 40-50% of fund value.That was based on a market value for the company of 15bn pounds.At the moment the market value might be about 6-7bn - but that's a hell of a lot better than the 3bn estimates we saw when the DM was announced a year ago. I think that's probably where that 1,100 figure comes from.

So let's wait and see.

(Obviously when you take the flat rate bonus into consideration, the return on investment is much better for the smaller policies than the bigger ones: anyone with a big policy and particularly if it has a decent terminal bonus left would almost certainly be better off to depart now, particularly if it's a pension and can be removed on contractual terms with no MVA - IMHO )

Compensationitis

What happens if Standard Lamp have to pay out £billions for the LAUTRO scandal?