Surrendering my endowment policy

jim3011

My 25 year Endowment Policy matures in September this year.

I received the following surrender value today

Value of Units £26224,19

Plus Terminal Bonus £20192.63

Plus reorganisation bonus £1389.88

Amount Payable £47806.70


When I spoke to them the other day they stated I would receive £47806.80 if I surrendered it. My question is. Would I receive the Terminal Bonus £20192.63 at this time?

The reason Im looking surrender it, is the amount payable (£47806.70) is more than enough to pay off my mortgage and I could pay it off early. If I waited until September when it matures I would save around £2500 on mortgage and endowment payments.
Is the final amount payable likely to be more than the £2500 I would pay over the next 6 months?
Jim

fewcloudy

*Removed this bit, as duff info given by me

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How would you save £2500? Surely it would just come from your endowment payout, rather than your bank account? That's not a saving, that's just paying the debt from a different source. I think all you would save would be the interest payable on the next 6 months, that's all.

dunstonh

My question is. Would I receive the Terminal Bonus £20192.63 at this time?

yes. It accrues as you go along. That is why it is included in the surrender value.

Surrendering it early can see a surrender penalty and if yours is a plan with an MEP (mortgage endowment promise value) then these are lost if you do not hold to maturity.

Is the final amount payable likely to be more than the £2500 I would pay over the next 6 months?

Not enough information to go on. The answer could be yes or no.

fewcloudy

dunstonh wrote: »

yes. It accrues as you go along. That is why it is included in the surrender value.

Surrendering it early can see a surrender penalty and if yours is a plan with an MEP (mortgage endowment promise value) then these are lost if you do not hold to maturity.

Is the terminal bonus the same thing as a final bonus?

And in my post #2 I mistook terminal bonus for the MEP, sorry.

dunstonh

Is the terminal bonus the same thing as a final bonus?

yes.

The old names of reversionary bonus and terminal bonus were replaced with annual bonus and final bonus respectively. Although many still use the old names or sometimes flit between the old and new in a single conversation due to habit.

The old conventional with profits plans could also suffer a reduction in the basic sum assured to which bonuses were added to on early surrender. Not sure that there are many conventional WP plans left any more.

And in my post #2 I mistook terminal bonus for the MEP, sorry.

The MEP is the big thing. The average MEP is around £5000 but I have seen over £15,000. The OP doesnt mention the provider so we dont know if its one that operates an MEP.