Sell or not to Sell and endowment and is tax payable if you do?

Breize

Please help a Financial Numpty out by commenting on all and answering the specifics:
We got an endowment Mort in 1989 for 38K form Legal and Gen, and had to top up the endowment £12K with one from Standard Life (took out the endowment out before we finalised the house and it fell through so wound up buying a more expensive property).

The L&G advisor talked only about the size of the surplus saying that it would never NOT pay off the mortgage. When we tried to claim for mis selling in December, we got turned down by L&G as there is a standard print bit saying that they could under perform - we did not go to the ombudsman. We trusted the agent as he sold and arranged my first mortgage 2yrs earlier - my understanding was such that I stopped paying the endowment in my first house after a year not thinking it was important and i preferred to use the money to party.

IMO the L&G's performance is very poor so we remortgaged but maintained the endowments. I was upset to see in this years L&G statement that our attaching bonuses are less than the premiums paid because of smoothing apparently! My husb has been talking about getting rid for the past 2 yrs but they are a security blanket to me. I am wavering but still not a 100% sure.

Can you tell me - do the projections the company demonstrate include terminal bonuses?

If we sell or surrender, do you have to pay tax because I read some where that tax is payable if you sell less than 75% of the way through the time period - no one else has mentioned tax on here?

If tax is payable, how do we set the money against my husband's tax allowance as he works part time so would still be a basic rate tax payer rather than joint or mine which would push me straight into the higher rate?

Can I come back and ask more about this topic if need be?
Thanks

dunstonh

I was upset to see in this years L&G statement that our attaching bonuses are less than the premiums paid because of smoothing apparently!

annual bonuses are just one part of the return. Did you include the guaranteed sum assured and final bonuses in your review?

Can you tell me - do the projections the company demonstrate include terminal bonuses?

Not normally with conventional with profits plans.

If we sell or surrender, do you have to pay tax because I read some where that tax is payable if you sell less than 75% of the way through the time period - no one else has mentioned tax on here?

We have mentioned tax frequently on here.

If its past 10 years, then you havent really got an issue with tax.

Breize

Thanks Dunstonh.
No I didn't include the guaranteed sum assured or final bonuses because I felt they were irrelevant: 1 - because I wouldnt get them both if the policy was determined one way or another and 2 because they dont reflect current performance; this years bonus is less than one third of what I have paid in and the stock market was rising last year. I've missed the tax comments will look for those again.

dunstonh

No I didn't include the guaranteed sum assured or final bonuses because I felt they were irrelevant: 1 - because I wouldnt get them both if the policy was determined one way or another and 2 because they dont reflect current performance;

Terminal bonus reflects current performance. Annual bonuses are going to remain lower for solvency issues. The bulk of the returns from now on are going to be terminal bonus and not annual.

The guaranteed sum assured has a lot to do with it as well. From the very first premium, you had around a third of the value of the policy. In reality that is paid for, along with the life cover over the whole term. It is still part of the value.

Breize

Thanks, I think I understand now. ...B

Forever_Red

dunstonh wrote: »

Terminal bonus reflects current performance. Annual bonuses are going to remain lower for solvency issues. The bulk of the returns from now on are going to be terminal bonus and not annual.

How would you find out what the terminal bonuses are likely to be? Do they get published anywhere (previous and current)?

Alan

dunstonh

Forever_Red wrote: »

How would you find out what the terminal bonuses are likely to be? Do they get published anywhere (previous and current)?

Alan

Final bonuses are unique to the policyholder. Even a week's difference in investment dates can make a difference to the amount.

You ask your IFA or your provider what it is. Some tell you on their statements. Others will tell you on their website (if they make your policy valuation available). Others wont tell you and keep it hidden until maturity.