Maturing endowment policies ...........

leveller2911

We have 2 endowment policies maturing at the beginning of May and we are confused with regards to the values.

Both policies were for a term of 18yrs, both with Royal London (formerly CIS) and both policies were £20.00 per month.

The first was for our son when he was born and the sum assured is £3,529.00 and the value when it matures next month will be around £5,600.00

The second was for my wife (smoker) and the sum assured was for £2,000.00 and the value when it matures next month will be around £3,170.00

Question is : Both taken out at the same time,term is the same (18yrs) , both £20.00 per month so why such a difference in values on maturing?. Total amounts paid into each policy is the same (£4,320.00) so one has lost around £1,150.00 and the other has increased by £1,280.00?.

I understand that one is for a smoker and the other was for a baby but the difference between the 2 values is around £2,430.00

Any clarity would be appreciated..

AnotherJoe

Did they include a life assurance element ?

leveller2911

AnotherJoe wrote: »

Did they include a life assurance element ?

IIRC just "sum assured"....... Thanks for replying btw.:D

EDIT: No life assurance mentioned just "Endowment Assurance policy"

Both of the "maturing " values I posted above are estimated until the policies mature at the beginning of May.Letters received today from RL.

dimbo61

Any endowment policy will pay a lump sum if the policyholder dies during the term.
Your wife was a smoker and older than your son so the premium for her life assurance would be more each month than your sons premium

Thrugelmir

leveller2911 wrote: »

The first was for our son when he was born and the sum assured is £3,529.00

The second was for my wife (smoker) and the sum assured was for £2,000.00

From the outset the policies were already £1,500 apart. The sum assured is what the bonus is based upon. The difference is the cost of the life cover, i.e. the probability of surviving the term. Age not just being a smoker would have also made a difference.

leveller2911

dimbo61 wrote: »

Any endowment policy will pay a lump sum if the policyholder dies during the term.
Your wife was a smoker and older than your son so the premium for her life assurance would be more each month than your sons premium

Thanks dimbo. We thought that but then my wifes sum assured was for only £2,000 and our sons was £3,529.00 so her policy would have paid out a fair bit less than our sons if (God forbid) anything happened during the term.

leveller2911

Thrugelmir wrote: »

From the outset the policies were already £1,500 apart. The sum assured is what the bonus is based upon. The difference is the cost of the life cover, i.e. the probability of surviving the term. Age not just being a smoker would have also made a difference.

Just a bit disappointed that my wifes policy value is £1,150 less than we put in so its cost us £1,150 for a benefit that would have been no more than £2,000-00.

Thrugelmir

leveller2911 wrote: »

Just a bit disappointed that my wifes policy value is £1,150 less than we put in so its cost us £1,150 for a benefit that would have been no more than £2,000-00.

You would have received any bonuses earnt to the date of the claim. Unfortunately no really a good investment product. Best to keep life cover and investments separate.