High Risk Shortfall - Help!!!

charismatic

I have just received a letter from Standard Life informing me that my two endowments with them are at HIGH risk of shortfall. The first one was taken out in 1987 and matures in 2012, the IFA was Halifax BS and the endowment was for 34,000 with profits, they are telling me that there will be a shortfall of between 9,500 and 14,500. The value at present is £13,327.00 with a minimum amount payable at maturity is 19,513.00. On the second endowment taken out in 1993 and matures in 2013 with West Midland Brokers as IFA for 18,000, the shortfal is between 6,000 and 8,500 with a current value of 5,317. Can anyone tell me what to do? - as I am completely new to this.

EdInvestor

Hi charismatic,

First don't forget there's a demutualisation bonus coming your way next year, so that will help a bit

Second, can you post the following info, so we can have a look:

Surrender value
Min amount at maturity (guaranteed sum assured + declared bonuses)
Monthly premium
Any terminal bonus left in the first one?

mummybear_2

Good morning,

I suggest that you have a look at the Financial Services Authority (FSA) website - using the following link will take you to the consumer information section, which has printable factsheets with information on various topics....including endowment policy projections, shortfalls, options etc....

http://www.fsa.gov.uk/consumer/01_WARNINGS/endowments/mn_endowment.html

(In case you don't know, the FSA is the regulatory body for the financial services industry).

As you have a rough idea of the amount of shortfall on your endowment policies, then one option is to convert roughly that amount on your mortgage to a capital and interest repayment method - meaning that every month your payment for this part of your mortgage includes some capital and some interest, thereby repaying that part of the debt off as you go along. You should talk to your existing mortgage lender to find out if this is right for you.

Obviously, there is the question whether you feel you were missold the policies, but many people have pursued this avenue based purely on the performance of a policy, which alone is not grounds for a complaint - otherwise anyone with an investment with an element of risk would complain when it did not perform! Again, guidance on complaining about the selling of an endowment policy is available on the FSA website.

Hope this helps!

Good luck, and try not to panic - there are options available!

Helen

charismatic

Will get the info to you in the next couple of days - thanks again.