Endowment... Surrender or keep?

the_cat

Hi all

Am considering cashing in my Norwich Union (always been with NU so don't think I am in line for a windfall payout???) endowment policy. I would pay the lump sum off my mortgage and increase by mortgage payments by the amount of the endowment premium.

I would really appreciate some advice as to whether it would be best to do this or continue with the policy.

Surrender value £21990
Start 15/3/1989 Maturity 15/3/2014
£59.16 monthly payment
Projections 4% £31100
5% £33100
6% £35400

Target/sum assured £46000
With profits benefit £15824
Reg Bonuses £8086.30
Paying 6.5% interest on mortgage which is fully flexible

Many thanks

djbd1973

the_cat wrote: »

Hi all

Am considering cashing in my Norwich Union (always been with NU so don't think I am in line for a windfall payout???) endowment policy. I would pay the lump sum off my mortgage and increase by mortgage payments by the amount of the endowment premium.

I would really appreciate some advice as to whether it would be best to do this or continue with the policy.

Surrender value £21990
Start 15/3/1989 Maturity 15/3/2014
£59.16 monthly payment
Projections 4% £31100
5% £33100
6% £35400

Target/sum assured £46000
With profits benefit £15824
Reg Bonuses £8086.30
Paying 6.5% interest on mortgage which is fully flexible

Many thanks

It may be worth writing to Norwich Union to get a value as it stands today because the projections are forecasts that are required to be given. There is also a website that you can go on that will tell you its value but it charges a fiver for the service -
www.endowmentcheck.co.uk

It might be more beneficial to keep it rather than surrending it or selling it, which is another option, because some endowments are actually doing quite well although I don't know about Norwich Union.

Perhaps one of the regulars on this site who knows what they are talking about will be able to give you a proper 'suggestion'.

the_cat

Forgot to add that the 'Promise amount' is a max of £8600. But I'm not sure how likely it is to be paid. The bloke at NU today said they currently expect that it will be but it could change (giving 3 years notice). Can I trust this - they sold me the grotty thing with huge promises of lump sums so I don't really believe them anymore!

djbd1973

Also, do a search on Norwich union and endownment on this forum as I have seen a few people ask about this in the past.

Here is one of the threads I've found-
http://forums.moneysavingexpert.com/showthread.html?t=543803&highlight=norwich+union+endowment

EdInvestor

the_cat wrote: »

Am considering cashing in my Norwich Union (always been with NU so don't think I am in line for a windfall payout???)

Correct

I would pay the lump sum off my mortgage and increase by mortgage payments by the amount of the endowment premium.

Projections 4% £31100
5% £33100
6% £35400

If you did as you suggest, then at maturity you would have received the equivalent of 40,417, well ahead of their best projection.

You may like to try getting a sale quote, in case there is hidden value in there ( eg th promise) from https://www.apmm.org.

Don't forget to replace the life cover before you sell or surrender if you still need it and factor the cost into your sums.

dunstonh

The NU promise value is almost certainly safe. They have the funds for it and the cap they put on it made it affordable.

Add the promise value to the mid projection to get a rough idea of final amount. That makes keeping it better than selling it.

the_cat

Thanks to all of you for the advice

On balance it looks like we should be best off keeping it. I am still tempted though, as it would pay off about 2/3 of our mortgage.

It is sooooooooooo tempting.......................

dunstonh

One final check, which may swing the decision or not is to look at your projections and see if the final bonus is included or not. NU appear to show it on some plans and not others. If it is not included, then that certainly increases the case for keeping it.

EdInvestor

dunstonh wrote: »

Add the promise value to the mid projection to get a rough idea of final amount.

If you do that you end up with 41,700, which is only 1,300 more than you would get if you surrendered and paid off the mortgage.

Definitely worth checking with the TEP traders to see if they will give you a better quote than the surrender value for selling it so as to make up the difference.