Surrendering endowment

glastowinebar

I have a 17 year endowment policy with standard life which I bought in 1993 and it matures in November 2010...3 years time.

It was initially bought to pay off the interest only side of my mortgage which was £54,510. However SL told me there would be at least a £10,000 shortfall...oh goodeee!! So I took action and added the £10,000 to my repayment side of the split mortgage leaving me with only £44,510 interest only. (I couldn't claim for a mis-sold policy as my ex wife worked for the Halifax and it was on an Execution basis only, so apparently no advise was given )

SL is still not guaranteeing it will pay off that sum even though it is £10,000 less than the original! :mad:

I pay £159 for the endowment and £250 for the interest only mortgage (the repayment side is now paid off)

My question is....should I cash in the policy, it's surrender value is now worth £35,650 (it was 35,850 last week!!) and use it to pay off part of the mortgage....which will then only leave me with £9000 (ish) mortgage to pay off

So now and until November 2010 I pay

£159 endowment
£250 interest only mortgage

or cashing it in and pay

£9000 mortgage @ current%rate for 3 years

would I be better off?

Thank you

kitchen_buff

Never surrender an endownment policy. Look on the internet of the mail on sunday financial pages about selling it, you will get a lot more for it that way

EdInvestor

Post the following info:

Guaranteed sum assured
Declared bonuses
Surrender value
Maturity date
Maturity forecasts
Interest rate payable on mortgage.
Value of mortgage promise (if any: this only applies to endowments which were forecasting shortfalls in y2,000)

If you want to get quotes for selling it, try here:

https://www.apmm.org

dunstonh

You wont have a shortfall of 10k. Standard Life are notorious for under protecting and many of their endowments have a mortgage promise value which will go some way to covering that if there has been a shortfall indicated for a long time.

I did a review of a standard life policy a few weeks back that is performing above 7% p.a. and on track for a surplus using the original illustration information. However, the projections issued used rates which were far less than real performance. Plus, the terminal bonus and mortgage promise values were not included in the projections.

glastowinebar

Thanks all for the replies

dunstonh

how did you go about doing a review of an SL policy? I have access to mine on line and it only tells me what it's worth now and the low medium and high (4-6-8%) growth rates projected worth at maturity...but not what the growth rate is at this time.
I phoned SL and the girl said that she would 'stick her neck out' and say it would be the low rate of growth and that all the endowment companies go for the same 4-6-8% but in reality the low rate is 3.5%...a bit of a doom and gloom prophesy there!

I was under the impression that since a couple of years ago the 'promise' had been broken

glastowinebar

I've just played about with one of those mortgage calculators and £9000 over 3 years at 6.5% interest is £275 per month

beats the £400 a month I'm paying for my endowment policy and interest only mortgage

and both pay off the mortgage at the same time

denise43

Hi, I also worked for the Halifax years ago and was sold an endowment by them when I worked there on an execution only basis. I was told it didn't matter that it was on an execution only basis and subsequently put in a claim which was successful. If you feel you were mis-sold then claim.

Good Luck.

glastowinebar

Hi Denise
Thanks for your reply

I have put in a claim and Standard Life said it had nothing to do with them as they didn't 'sell it' so I wrote to the Company who sold us the policy who are Independent Financial Advisers in Rossendale Lancs and they said they had not given any advice because it was Execution only done through the Halifax Staff Association who's members (my ex) were allowed to process their chosen policy with what they called a 'commission cashback' whereby she received a share of the commision received by the Independent Financial Advisers ..they said all the correspondence was carried out by post and no advice was given.

I then took it to the Omsbudsman who stated that I didn't have a case so they said I could take it no further

So I didn't take it any further

dunstonh

how did you go about doing a review of an SL policy? I have access to mine on line and it only tells me what it's worth now and the low medium and high (4-6-8%) growth rates projected worth at maturity...but not what the growth rate is at this time.
I phoned SL and the girl said that she would 'stick her neck out' and say it would be the low rate of growth and that all the endowment companies go for the same 4-6-8% but in reality the low rate is 3.5%...a bit of a doom and gloom prophesy there!

Ignore what the SL person tells you. Call centre staff wouldnt be call centre staff if they knew what they were talking about.

Most standard Life endowments were set up using target growth rates in excess of 6%. 7% being popular. Target growth rate is available upon request.

Once you know the target growth rate and the current value you can ascertain the growth rate that it has achieved to date (if you have the software or the ability in excel to calculate it). The one I reviewed needed 7% and had been achieving 7.1%.

The 4,6 & 8% are the maximum figures and not all companies use them. Many Std Life plans are exceeding 6%. Although using 6% is a good guide.

Another thing to find out is if the terminal bonus is included in the projections. Again, get this in writing as the call centre staff dont appear to know this. The Std Life ones I have reviewed have not included it in the projections (or the mortgage promise value).

I was under the impression that since a couple of years ago the 'promise' had been broken

It was watered down in that it wouldnt increase if things got worse. It had a cap put on it. However, if you had a mortgage promise value, that can still still exist. Again, they can tell you the value.

Hi, I also worked for the Halifax years ago and was sold an endowment by them when I worked there on an execution only basis. I was told it didn't matter that it was on an execution only basis and subsequently put in a claim which was successful. If you feel you were mis-sold then claim.

That is not quite correct. Execution only cases do matter as execution removes the ability to have the complaint upheld. However, the advice provider needs to have it documented that it was execution only. With the banks, many of the advisers put the case through as advice rather than execution only so the staff member got the credit for a sale which they wouldnt have got on execution only basis. So, yours was probably successful as the person that sold it docuemented it wrong.

I have put in a claim and Standard Life said it had nothing to do with them as they didn't 'sell it' so I wrote to the Company who sold us the policy who are Independent Financial Advisers in Rossendale Lancs and they said they had not given any advice because it was Execution only done through the Halifax Staff Association who's members (my ex) were allowed to process their chosen policy with what they called a 'commission cashback' whereby she received a share of the commision received by the Independent Financial Advisers ..they said all the correspondence was carried out by post and no advice was given.

I then took it to the Omsbudsman who stated that I didn't have a case so they said I could take it no further

So I didn't take it any further

Thats how it should have been done and is the correct response for it. It appears the documentation for yours was right.

EdInvestor

Nobody can give you a real idea on how to proceed until you post the interest rate on the mortgage and the endowment maturity projections at the minimum.

glastowinebar

glastowinebar wrote: »

I have a 17 year endowment policy with standard life which I bought in 1993 and it matures in November 2010...3 years time.

It was initially bought to pay off the interest only side of my mortgage which was £54,510. However SL told me there would be at least a £10,000 shortfall...oh goodeee!! So I took action and added the £10,000 to my repayment side of the split mortgage leaving me with only £44,510 interest only. (I couldn't claim for a mis-sold policy as my ex wife worked for the Halifax and it was on an Execution basis only, so apparently no advise was given )

SL is still not guaranteeing it will pay off that sum even though it is £10,000 less than the original! :mad:

I pay £159 for the endowment and £250 for the interest only mortgage (the repayment side is now paid off)

My question is....should I cash in the policy, it's surrender value is now worth £35,650 (it was 35,850 last week!!) and use it to pay off part of the mortgage....which will then only leave me with £9000 (ish) mortgage to pay off

So now and until November 2010 I pay

£159 endowment
£250 interest only mortgage

or cashing it in and pay

£9000 mortgage @ current%rate for 3 years

would I be better off?

Thank you

Ok I have just has my yearly statement with it's 'RED ALERT' High Risk of not reaching it's target

My interest only mortgage rate (before the last BOE rate reduction) is 6.390%

They say that the average growth of my plan is 3.88%

The Unit value is 30,291 with a Final Bonus of £5104 giving a total surrender value of £35,395

They say that the original 'promise' of £3,410 has been scrapped and it may be between £1,364 and £2,046 although it could be zero

Projections are

4% = 43,600
6% = 45,800
8% = 48,100

hope this helps