cash in endowment???

madcaplost

I have an endowment policy with Winterthur Lifewhich is showing a projected shortfall of £13000 off of a target amount of £46000.It was a low start plus endowment which when started in 1989 was £40 and after 5 years increased to £81,which is what it is now.A banking friend said I should transfer to a repayment mortgage for the remaining 9 years and cash in the endowment.Dont know what to do for the best,fed up with IFA,woundn't be where I am now without them.It is a mixed fund policy and the value of units in fund is £15000.

help
madcaplost

dunstonh

low start endowments were a bad move. You end up paying more over the term than a level low cast endowment and you get back less. They were really designed for those with a really low budget at the start but expected to earn more later on. This can make it harder to support a mis-sale claim if the advisor has documented that adequatly. If not documented correctly, it obviously has the reverse.

Your banking friend has broken the rules of the FSA and could face fines or imprisonment if you were to follow his advice and it was incorrect. He could be right, he could be wrong but without investigating the policy correctly, he cannot be sure. What if you have the type of endowment that has higher allocation rates later in the policy? These could close the gap quite significantly. What if the difference between the surrender value and current value is higher than the premiums you still have to pay over the remaining term? What if you cannot get insured again elsewhere or the premium is rated to be much higher?

I'm not saying you should or shouldnt surrender the endowment but doing so without knowing the information on the plan is foolish. Although many bad endowments have been surrendered, a number of very good ones have too because people have assumed the worst and done so without knowing what they have given up.

EdInvestor

Hello madcaplost,

What is the surrender value of this policy?
Is there a higher allocation rate in later years, if so what are the deatils?
What funds is the money invested in? Do you need the life assurance?