Endowments: to sell or not to sell??

splewington

Hi all,

I have a couple of R&SA (now Pheonix) policies which are performing really badly and I am considering selling them. Based on the following, and in your opinion should I consider doing this now and if so what value could I expect to attain by selling the policies? I need both to cover the interest only element of my mortgage (currently £100k)

Many thanks in advance..

Policy 1:
Guaranteed sum assured: £25,178
Death benefit: £47,613
Total bonuses: £1369.27 (as at 31/12/06)
Surrender value: £9,431 (as at today)
Monthly premium: £106.78
Maturity date: 04/06/2023
Maturity forecasts : £39,600 (3.75%), £47,700 (5.5%)

Policy 2:
Guaranteed sum assured: £34536
Death benefit: £67,137
Total bonuses: £2555.05 (as at 31/12/06)
Surrender value: £14,395 (as at today)
Monthly premium: £139.52
Maturity date: 23/01/2023
Maturity forecasts: £54,500 (3.75%), £65,800 (5.5%)

EdInvestor

What interest rate are you paying on your mortgage?

splewington

4.69% fixed until Feb 09. Thanks

splewington

Is anyone able to assist? Many thanks

EdInvestor

splewington wrote: »

Policy 1
Maturity forecasts : £39,600 (3.75%), £47,700 (5.5%)

Unlikely you can sell these policies but if you surrender this one and use the money to reduce the mortgage loan @4.7% also increasing the mortgage payment by the amount of the endowment premium, by maturity your notional return would be 50,062, well ahead of their best estimate.

Policy 2:
Maturity forecasts: £54,500 (3.75%), £65,800 (5.5%)

Doing the same with this one, the return would be 65,009, much the same as their best estimate - but of course paying off the mortgage is a guaranteed return, rather than a risk-based one.You want an extra return for anything risk based.

Be sure to replace the life cover before you surrender, if you need it.

splewington

Thanks EdInvestor.

When you say unlikely I can sell the policies does that mean no-one will want them?

Also - do I have any grounds for pursuing R&SA over these. I bought them from a family friend (mortgage advisor) originally who advised me of the risks involved but I thought I had counteracted that risk by opting to assume the lowest level of growth (3% I think) and putting more money in each month. These were supposed to net me £30k + after paying my mortgage off!!

splewington

What do you reckon EdInvestor. Is there another route other than mis-selling that I can pursue here?

dunstonh

who advised me of the risks involved but I thought I had counteracted that risk by opting to assume the lowest level of growth (3% I think) and putting more money in each month.

Is there another route other than mis-selling that I can pursue here?

There is no mis-sale here. You were told the risks, you knew about them and still went ahead.

Investment returns are not something you can complain about although you will probably find that Phoenix are capable of getting 3% average if you include the terminal bonus. Not much chance of the annual bonus alone getting 3% though.

EdInvestor

splewington wrote: »

Thanks EdInvestor.

When you say unlikely I can sell the policies does that mean no-one will want them?

Correct.

Also - do I have any grounds for pursuing R&SA over these. I bought them from a family friend (mortgage advisor) originally who advised me of the risks involved but I thought I had counteracted that risk by opting to assume the lowest level of growth (3% I think) and putting more money in each month. These were supposed to net me £30k + after paying my mortgage off!!

It doesn't sound like it - the problem is investment returns combined with lax regulation of the way insurers were running their business. You are suffering from the 2000-03 stockmarket crash and the fact that other people at RSA have guarantees on their products which the insurers must now reserve for properly. Neither of these issues are really covered in the misselling complaints system

You're best to cut your losses on this and reinvest via the mortgage to obtain the higher return IMHO.