endownments issued in 1980

Paul_Dean

my endownment company, friends provident, has written to me advising me of a shortfall. I read that claims can only be made on policies issued after 1985. Can anyone clear that up and/or advise me what to do? I am planning a mortgage extension and am considering cashing in my policies which have about nine years to run.

payless

How long did you take the policies for ?
1980 + 25 would equal 2005 maturity anyway.

robnye

Paul_Dean wrote:

my endownment company, friends provident, has written to me advising me of a shortfall. I read that claims can only be made on policies issued after 1985. Can anyone clear that up and/or advise me what to do? I am planning a mortgage extension and am considering cashing in my policies which have about nine years to run.

yes - any claims on policies have a maximum 15 year, i had the same problem, with a policy taken out in 1987,

EdInvestor

Hello Paul,

Gosh, 35 year endowments?

Post some figs and we'll have a look.

Guaranteed sum assured
Attaching bonuses
Surrender value
Monthly premium
Maturity date

dunstonh

I would have thought that a 1980 policy would be showing a surplus. You have had some good years in there and would have been less affected by recent events than most. Plus you had LAPR which later endowments didnt get.

Remember that shortfall projections do not include any terminal or additional bonuses that have built up. A 1980 policy should have some terminal bonus unless. A 29 year endowment/mortgage in 1980 would have been very unusual.

EdInvestor

Oh and who sold you the endowments?

EdInvestor

dunstonh wrote:

I would have thought that a 1980 policy would be showing a surplus. You have had some good years in there and would have been less affected by recent events than most. Plus you had LAPR which later endowments didnt get.

It is Friends Prov of course, which was badly hit on the guarantees side.Of course the poster will have had a demutualisation bonus, which is more than the poor people at RSA can say.:(

Froggitt

Id be surprised for a 1980 endowment, even if miselling was proved, whether you would be due any compensation to put you in the same place as you would have been with a repayment.

Note that FP are one of the LifeCos who have voluntarily agreed to hear pre-1988 misselling cases.

mystic_trev

Editor wrote:

Of course the poster will have had a demutualisation bonus, which is more than the poor people at RSA can say

I've got an RSA Endowment (old Royal Life Policy) taken out late 1982. Hard to believe, but it's still on target, and even looks like having a surplus!

dunstonh

mystic_trev wrote:

I've got an RSA Endowment (old Royal Life Policy) taken out late 1982. Hard to believe, but it's still on target, and even looks like having a surplus!

Not hard to believe at all. LAPR applied to your policy and its long term. Endowments of 25 years currently maturing are generally still paying out surpluses.

Although many endowment policies invest in areas with little potential for growth and some action is required to sort those out, the projection method used to show shortfalls is flawed.

Endowments have always grown on a curve basis but the projection method assumes straight line. A product which has front loaded charges is never going to show "on track" in the early years. Even if it is the best endowment in the world. Add in the fact that terminal bonuses are not allowed to be included (or any other additional bonus), leaving only the annual bonuses, and this means people could be surrendering perfectly good endowments (as has been the case).

EdInvestor

The last Money Management survey on endowments six months ago showed RSA 25 yr endowments maturing with a 28% Terminal bonus, 20 yrs with 13%, 15 years with 5% and 10 years with nil. The trend is pretty clear, sadly

Just for interest, the comparison with Standard Life was:
25 years 37%, 20 years 17%, 15 years 4%, 10 years nil.

These figures (which date from Aug 2004)are already much lower but at that point even with the cuts, Standard Life was still ahead of the Pru on the older policies

Pru figures
25 years 31%, 20 years 17%, 15 years 17%, 10 years 8.5%.

And for the OP

Friends Provident

25 years 26%
20 years 9%
15 years 9%
10 years nil

Pretty dire a year ago, probably worse now