Standard Life again

benz

Could a knowledgable person cast their eye over the following endowment policy details and advise best way forward please

Policy taken out in 1985 & matures 2010.
Monthly premium £36. Guaranteed Death Benefit £25,000.
Total Bonus added £7760, Sum Assured £8120, Minimum Payout at maturity £15880
Basic Surrender Value £11,760. Final Bonus £1000. Total Surrender Value £12,760

Mortgage is paid off and life assurance no longer required.

Should I: -
Keep it till maturity?
Surrender it after the demutualisation bonus next year?
Surrender it now?

Thank you

EdInvestor

Hi Benz

benz wrote:

Final Bonus £1000.
Mortgage is paid off and life assurance no longer required.

OK here's an example of an old Standard life policy which still has one of those rapidly disappearing beasties, a terminal bonus, in it.

If you kept this policy to maturity and kept paying the premiums you'd get a guaranteed 15,880 and probably not a lot more, because that TB will almost certainly be taken away over the period.

If you take it now, and put the S/V in the bank at 4.5%, also paying in the premiums, you would get 18,322 in 5 years time, 2,442 more.

Would the DM bonus bridge the gap?

It might - just - but frankly I wouldn't bet on it.

In this case, a bird in the hand is probably the best policy.

And if you do decide to surrender, don't delay, because those TBs are rapidly becoming an endangered species.

benz

Thanks Editor,

I was hoping you would say hang on for the DM bonus......

Presumably, paying a further £600 in premiums waiting for the DM bonus and then selling immediately, expecting a terminal bonus as well, is pie in the sky.......

EdInvestor

Benz

It might work out like that

BUT

It's more likely that as you pay your premiums, the TB will be deducted bit by bit so that by the time the DM comes, you have made no gain at all and the DM bonus will just replace the missing TB, which you already had upfront, but failed to crystallize,so to speak.

dunstonh

OK here's an example of an old Standard life policy which still has one of those rapidly disappearing beasties, a terminal bonus, in it.

You shouldnt keep repeating that as I have come across a number of Standard Life plans with terminal bonuses and some with increased terminal bonuses over the last 12 months.

EdInvestor

You shouldnt keep repeating that as I have come across a number of Standard Life plans with terminal bonuses and some with increased terminal bonuses over the last 12 months.

The company has said it will be cutting terminal bonuses for the next 10 years It has lost 80% of the free assets, so this is a believable remark,as there is nothing left to pay the terminal bonuses with. This is indeed why Standard Life needs to demutualise - to raise new capital because the old management lost most of it :mad:

There are of course still some TBs left on old policies.But I wouldn't bet on them lasting for long, sorry to say, and they are diminishing by the day.

It is very depressing but we might as well face reality.

dunstonh

Standard Life pays terminal bonuses based on the age of the plan and when it was taken out. The rate of the terminal bonus may be cut in places but this doesnt stop the fact that some policyholders have seen an increase in their terminal bonus whilst others have seen a drop.