Norwich Union With Profits Fund

magnabill

Could any kind soul ofer advice regarding a Norwich Union Endowment. Quite simply, should I continue with it for another 7 years or surrender it back to them and take the cash?

We took out this endowment on 7/7/1989 to cover a £35,000 mortgage paying £55.45 per month. In the meantime we were able to pay off the mortgage and kept the Endowment going. It matures on 7/7/2014 (7 years time).

I spoke to NU this morning and was told that the surrender value would be £16,214 The Endowment gives life cover of £35,000 upon death of either of us, which is cover that we don't really need.

I received a letter from NU stating that there would be a shortfall of the target amount £35,000. @ 4% £11,400 @ 5% £9,800 and at 6% £8,100

Is NU one of the better companies? Is it worth continuing with the monthly payments or should we take the money and stick it somewhere else? If anyone has any thoughts on this I would be most grateful.

With Profits benefit £12040
Declared bonuses £6152.85
Surrender value £16214.00
Monthly premium £55.45
Maturity date 7/7/2014
Target amount £35000.00

Cheers

EdInvestor

In the first instance suggest you seek quotes with a view to selling the policy here:

https://www.apmm.org

That will give you an idea of whether the surrender value offered is reasonable.

dunstonh

What is the current terminal bonus on the plan?
What is your maximum mortgage promise value?

Is NU one of the better companies?

Yes. Expectation is that most NU endowments will hit target or be there or thereabouts.

EdInvestor

dunstonh wrote: »

Yes. Expectation is that most NU endowments will hit target or be there or thereabouts.

Perhaps one should just remind that this is not what they originally said on the tin.The idea was they hit the target AND produced a sizeable tax free surplus big enough for a new car, luxury round the world cruise etc.

Of course the majority of endowments won't even reach the basic target these days

magnabill

EdInvestor, many thanks I've sent off for some other quotes to see if anyone is interested. I also agree with you that the selling point emphasised at the time was something along the line of 'an excellent surplus left over after paying off the mortgage'

dunstonh, many thanks for your info. I'm not sure of the terminal value or even the maximum mortgage promise value.

Cheers

dunstonh

many thanks for your info. I'm not sure of the terminal value or even the maximum mortgage promise value.

Make sure you find them out before you sell. The person buying will benefit from those if you dont. They will also get the special bonus when orphan assets are distributed.

Perhaps one should just remind that this is not what they originally said on the tin.The idea was they hit the target AND produced a sizeable tax free surplus big enough for a new car, luxury round the world cruise etc.

And most endowments taken out did. However, times change. This one is likely to hit target and if it does, its job done. Look back at most retail items from 10-20 years ago and you realise they are obsolete by todays standards. Financial services products arent any different.