Can this be right?

happyandcontented

We have three endowment policies due to mature next year, and a while ago I got projected value at maturity.

I am putting our financial affairs in order currently, so today I received current surrender values. There was almost no difference between the figures.

My question is can this be right bearing in mind that I expected the maturity value to include a terminal bonus?

I have asked for up to date projection figures, but on the face of it, it seems a no brainer to surrender and save the cost of premiums for 12 months. We pay approx £50 per month.

We will still have a £20,000 shortfall despite overpaying for years, but that can be addressed when it falls due.

Am I missing something? Is there likely to be a sum on top if it runs to maturity or should we cut and run?

TBeckett100

Don't forget that there is life cover built in

happyandcontented

Thanks, the life cover was just the sum of the mortgage so if the mortgage is not there that element of life cover would not be needed.

I have life cover with my current job, and would expect to have it with any future job.

Can you see any other issues?

Thrugelmir

Surrender value will exclude any terminal bonuses. As these will only be paid on maturity.

teacherspet1

We paid into an endowment policy for 15 years, when it matured we got £100 more than we had paid in over the years. Needless to say we were very disappointed. Apparently if you die your spouse/partner gets much more!! If you survive its tough luck......

kingstreet

Terminal bonus is included in a surrender value as you are still entitled to a share of the fund's undistributed profits even if you don't go full term.

So, obtain a surrender value one year when the terminal bonus element is higher as a result of well-performing investments and compare it with a maturity value a few years later where there have been further annual bonuses but the investment performance has been worse and it's quite possible the two figures could be similar or that the maturity value may even be lower.

happyandcontented

Thrugelmir wrote: »

Surrender value will exclude any terminal bonuses. As these will only be paid on maturity.

That is what I thought but it seems as if that is not correct. It looks as if the poster above is nearer the mark.

Can anyone else confirm this?

Big_John_246

Have a look at this, link; http://www.fca.org.uk/static/documen...ce/fg13-07.pdf

your bank has to help you.

kingstreet

TBH a projected maturity value is just that, a projection.

All it will do is use different specimen growth rates which are laid down by the regulator to show three different values at the end of the term.

Not particularly reliable.

A surrender value is a definite here and now figure, which as I said includes terminal bonus. Was there no breakdown of the value between sum assured, annual bonuses and terminal bonus so you could see each component?

If in doubt, ask the provider(s) if their values include terminal bonus. All the providers around in the 1980s when I was a broker consultant for Sun Alliance included terminal bonus in their surrender values and I can't imagine that changing for the worst as time has moved on.

happyandcontented

Big_John_246 wrote: »

Have a look at this, link; http://www.fca.org.uk/static/documen...ce/fg13-07.pdf

your bank has to help you.

Sorry, but the link isn't working.

TrickyDicky101

happyandcontented wrote: »

That is what I thought but it seems as if that is not correct. It looks as if the poster above is nearer the mark.

Can anyone else confirm this?

There will be an element of terminal bonus included in the surrender value. Kingstreet was spot on as usual.

This does of course assume that the investments have performed well enough to the date of surrender calculation for there to be 'undistributed profits' to distribute (ie include as terminal bonus).