Selling endowment

pstone

I am currently in the process of selling a Norwich Union endowment policy. The buyer requires the original policy document. A statment in the copy document says that the lender (Abbey) will have the original doc. I contacted Abbey and they said they did not have it. I contacted Norwich Union who said I would have to pay £25 for them to send a copy of the original. As I have never had the original this seems a bit steep. Does anyone have any advice on how I should progress?

dunstonh

As I have never had the original this seems a bit steep. Does anyone have any advice on how I should progress?

Norwich Union send out two. One to the lender that had the assignment and a copy document to you. The copy document is info only.

The fault here is with Abbey as they would have got it as it was them that requested it by having it assigned to them.

Why are you selling an NU policy?

You have the orphan asset dispersal coming probably next year. The buyer will get that. Plus, they get the mortgage promise value and terminal bonuses, neither of which are included in the projections. Make sure you are selling it after knowing the full facts of the policy as the buyer may be rubbing their hands together thinking they are getting a good NU policy cheap.

MUSTBEFUNNY_2

What's an orphan asset dispersal? I have NU policy too.;)

pstone

Why are you selling an NU policy?

You have the orphan asset dispersal coming probably next year.

I am selling the policy as I have got a 'red letter' predicting a shortfall. NU no longer give any idea of the value of the terminal bonus as they used to so I am in the dark about that. Please could you explain the orphan asset dispersal. Many thanks

EdInvestor

The orphan asset dispersal, if it happens, will probably result in a few hundred pounds increase on the value of the policy.The mortgage promise only applies to people whose policies were in shortfall in 2000 - most weren't.The surrender value includes accrued terminal bonus.

If a buyer offers you a large premium ( more than 10%) over the surrender value you could consider keeping the policy.But NU policies are likely to make a 6% return so if you are paying a similar or higher interest rate on your mortgage, you might as well take the money now in guaranteed form.

pstone

EdInvestor, thanks for your reply. I was in 2 minds about selling but from what you have written I feel I am making the right decision.

dunstonh

I am selling the policy as I have got a 'red letter' predicting a shortfall.

NU made all their plans red earlier this year to allow them to time bar complaints. They got rid of amber.

NU no longer give any idea of the value of the terminal bonus as they used to so I am in the dark about that.

They do give that info out and the amount is important to know as it is not included in your projections. For example, you may have a shortfall of £7000 at 6% but your current terminal bonus could be £8000. So, in reality, the endowment is heading for surplus even though you get a shortfall warning.

Most NU endowments do carry some mortgage promise value. Its mainly the better ones that dont. The typical value range I have seen on these have been between £2500 and £5000.

The surrender value includes accrued terminal bonus.

It does but it also includes a surrender penalty so it doesnt really show a true position.

I was in 2 minds about selling but from what you have written I feel I am making the right decision.

Eds information is based on assumptions without knowing facts. Much the same as you are doing. You dont know the terminal bonus and you dont know your mortgage promise value. They are vital facts to know. Also, have you found out the cost of replacement life cover? Sometimes the cost is not much different from the endowment.

A lot of good endowments have been got rid of (and some are holding on to naff endowments). Make sure you make a decision based on facts.

EdInvestor

The quotes from the TEP traders are the most objective indicator of any hidden value in the policy.