Sell/keep Norwich Union Endowment?

dunstonh

So, your target amount is £71330

You have a projection at 6% (which is probably the most likely figure) of £66,660. There is a current terminal bonus of £1389 to add on giving you £68049 and there is more than enough promise value (£5030) to make up the difference to the target of £71,330.

So, you have a good chance of hitting the required target.

EdInvestor

If you surrendered it and used the value to reduce the size of a new loan @6%, also adding the premiums to its repayment up to maturity you would end up with 80,803, significantly better than the forecast.

But this does reflect the critical illness cover attached to the policy.You really need to cost the replacement of the insurance element, if it is still needed.

If there are no regular bonuses on the policy that suggests it is unitised With profits and these policies can't be sold.You can confirm that by contacting these people;

https://www.apmm.org

dunstonh

Some NU plans have access to a unit linked range fund range. If this option is available to you, then a switch to those funds could offer much better potential as well as possibly reducing the risk down a bit.

tony.j

Thank you all for your excellent advice. I've found some old paperwork and the policy is indeed unitised with profits. A lot to think about!

Ed, when I did the calculations to work out break-even, that was against HSBC's 5.74% 10 year fixed rate. At 6% the endowment would have to perform even better to match the gain of reducing the loan and overpaying.

I've effectively paid in £127.65 * 95 months = £12126.75, for a surrender value of £13396.10. 10% on my investment is better than a kick in the teeth, at least.

jamesd

Next step is to ask NU if you can change the funds your money is invested in and which funds are available to you.

Don't forget the option of selling the policy and investing the money via stocks and shares ISAs. You should be able to do comfortably better than the mortgage interest rate that way.