endowment options

dummymummy

Hi, we have a with profits endowment which we took out in 1991 and which is due to mature at the end of the year. We want to cash it in early as the company is being taken over and we don't want to risk things going back - we have been wait for this for 24 years! We have contacted the company who we have the policy with and they have sent us the surrender paperwork. Reading this through it advised that we may get more money by selling it rather than surrendering it. I contacted appm(?) and gave them the policy details and apparently someone may or may not contact me with an offer within the next few days. I don't think I have to pay tax on the payout if i surrender the policy or if it matures but will I need to pay tax on the proceeds if I sell the policy instead?
The policy is worth about £35,000.

Any help would be greatly appreciated. Thanks a lot

HappyMJ

dummymummy wrote: »

Hi, we have a with profits endowment which we took out in 1991 and which is due to mature at the end of the year. We want to cash it in early as the company is being taken over and we don't want to risk things going back - we have been wait for this for 24 years! We have contacted the company who we have the policy with and they have sent us the surrender paperwork. Reading this through it advised that we may get more money by selling it rather than surrendering it. I contacted appm(?) and gave them the policy details and apparently someone may or may not contact me with an offer within the next few days. I don't think I have to pay tax on the payout if i surrender the policy or if it matures but will I need to pay tax on the proceeds if I sell the policy instead?
The policy is worth about £35,000.

Any help would be greatly appreciated. Thanks a lot

You will get a final bonus by allowing it to mature so I'd wait until the end of the 25 year term.

Companies get bought and sold all the time. The policy is invested in stocks and shares...not the company so I wouldn't worry about it too much. The value of the policy won't change.

Andypandyboy

We tood advice on this late last year our IFA said there would be a negligible difference if we waited six months or cashed in then. We cashed them in, and paid off the mortgage.

AnotherJoe

Andypandyboy wrote: »

We tood advice on this late last year our IFA said there would be a negligible difference if we waited six months or cashed in then. We cashed them in, and paid off the mortgage.

Yours would have had a small difference because it was almost certainly a unit linked policy. The OPs will most likely be with a bonus and selling it now would be a very costly mistake.

It won't be affected by being sold, and the reason someone will make an offer for is it they are looking to profit from OPs unwarranted panic.

TrickyDicky101

Surrender value will include an element of terminal bonus. What it won't include may be any valuable guarantees promised when the policy was taken out.

The IFA was therefore probably correct when he stated there would be little difference between surrender vs waiting until maturity (interim market moves could still impact, however).

dummymummy

Hi everyone, thanks for all your helpful advice. I appreciate all the comments. We need the money now so I am planning on getting rid of it despite the fact that I may lose out on a bit of cash. However my main issue is whether I would have to pay tax on the proceeds if I sell the policy rather than surrender my policy. Anyone have any ideas?
Thanks.