Standard Life Final Bonus Question

mleonard79

Hi Everyone,

I have a standard life endowment policy that I have been tracking the progress of for over a year now. Some of you may remember my Feb update thread which you can see HERE. The August interim bonus was added to my account today and I'm a little confused by it. It is a good bit smaller than the February bonus but that's to be expected with it being an interim one. It is also slightly smaller than last year's interim one.

In Aug 2006 my basic value was £11,033.95 with a Final Bonus figure of £310.65 and £439.65 all in was added at that time leaving a total plan value of £11,344.60

In Feb 2007 my basic value was £11,748.25 with a Final Bonus figure of £638.35 and £675.30 all in was added at that time leaving a total plan value of £12,386.60

Today (Aug 2007) my basic value is set at £12,024.15 with a Final Bonus figure of £1,241.15 and £385.80 has been added leaving a total plan value of £13,265.30

The thing that is confusing me is the fact that my basic value last month was £12,118.20 which is £94.05 more than the basic value this month Also the fact that the basic value is only £275.90 more than the basic value in Feb means that not even the entire £304.50 I've paid in premiums in this last 6 months is counted in my basic value.

Are they allowed to take money out of my basic value and transfer it into the final bonus like that? It's just a little worrying as I was under the impression that the basic value is set in stone but the final bonus can fluctuate up or down so in a worst case scenario I could lose the £94.05 that was definitely part of my basic value only a few days ago. I don't think that would happen but I'm confused as to why they have done this.

On a side note the growth of the endowment from Aug 06 to Aug 07 equates to £109.30 per month which means that the decision to hang onto it was the right one as I would only have gained around £55 p/m in saved interest by selling it and paying the money into the mortgage so I've gained nearly double the value by not selling.

Thanks for any help in clarifying this for me.

Regards

Michelle

Gorgeous_George

Does the gain of £103.87 include the monthly payments?

GG

dunstonh

Is this a conventional with profits policy or a unitised with profits policy?

mleonard79

Gorgeous_George wrote: »

Does the gain of £109.30 include the monthly payments?

GG

Hi GG,

No it does not include the monthly payment of £50.75 - if I included that it would be £160.05. The £109.30 is solely the profit/growth.

Regards

Michelle

mleonard79

dunstonh wrote: »

Is this a conventional with profits policy or a unitised with profits policy?

Hi Dunstonh,

It's a conventional old-fashioned with profts policy as far as I am aware (started up in 1991 for 20 years.) Thanks.

Regards

Michelle

dunstonh

Conventional with profits plans would have a fixed full sum assured and fixed basic sum assured.

The interim bonus is an adjustment to the annual bonus. So, that could well account for the slight difference.

Also, premiums have no impact on the value in the same way unit linked plans do. In effect you are buying £x amount of life cover with a guarnateed minimum maturity plus bonuses. The premiums you pay over the period give you the end result. You could have paid that premium up front potentially (not on this plan but there used to be single premium conventional WP plans for that sort of thing).

mleonard79

Hi Dunstonh,

Thanks for the reply.

dunstonh wrote: »

Conventional with profits plans would have a fixed full sum assured and fixed basic sum assured.

The only thing I can see on my online statements page is the basic sum assured, the final bonus and the total (I think the fixed sum assured is just put on my paper statements each year.)

dunstonh wrote: »

Also, premiums have no impact on the value in the same way unit linked plans do.

That explains a bit but I'm still confused as to how the basic sum assured has gone down £95 from last month to this month I thought that once money was in the basic sum assured it would remain there but perhaps I'm getting it confused with the fixed sum assured. I don't suppose it's a big deal as hopefully they won't be pulling any money out of my "final bonus" but it just took me aback a little bit. Has it often happened that final bonuses have gone down prior to endowments maturing or is that all down to how the stock market performs? Thanks.

Regards

Michelle

dunstonh

That explains a bit but I'm still confused as to how the basic sum assured has gone down £150 from last month to this month

That figure should never change. Neither up or down. Its fixed at the outset.

Has it often happened that final bonuses have gone down prior to endowments maturing or is that all down to how the stock market performs?

Its linked to performance but if anything, they tend to do the reverse.

EdInvestor

dunstonh wrote: »

Its linked to performance but if anything, they tend to do the reverse.

Not since the millenium they haven't.:(

Re the status of the endowment: with a conventional policy you should have a guaranteed sum assured (not the same as the amount to be paid out if you die) plus declared annual (reversionary) bonuses.

These two items added together make up the guaranteed value which is the minimum you get if you pay the premiums to maturity.

The terminal bonus is on top of that.

A unitised WP endowment will have a sum assured (the amount that would be paid out on death) but the value will be expressed in units.The dividsion between guaranteed and unguaranteed bits of the policy is much more blurred.

A unit linked endowment will not be invested in the WP fund. Some endowments are half unitised WP and half unit linked, with the unit linked money normally in the Balanced managed fund.

dunstonh

Not since the millenium they haven't.:(

Had a standard life 3 month maturity notice about 3 weeks ago that was stating an anticipated maturity of around £28,000. It had a target of £30,000. So, looked like it was running £2k short (ignoring mortgage promise value). We logged into Standard Life and that showed the current position including final bonus or £34k.

That is what you have to be wary of when you dont include the full data.

Terminal bonuses are on the rise again. Even Pearl have been putting some on their policies and they are an awful provider.

Many providers wont tell you the final/terminal bonus until it matures.

mleonard79

dunstonh wrote: »

That figure should never change. Neither up or down. Its fixed at the outset.

I must be getting mixed up then and it's not the "basic sum assured" I'm talking about as this amount changes every month - I've looked at my online statement again and the sum I'm talking about is termed as "basic value" and goes up every month (or it did until this month!) It seems that it's now only gone down £95, though, as they've added this month's premium and a little extra to it since I last looked (I've updated the figures in my first post to include this.)

I looked at the yearly statement too and teh basic summ assured is £10,450.00 and you're right this stays the same every year.

Regards

Michelle