Endownment -what To Do Please Help!!!!

angeleyes

HI GUYS
CAN ANYONE GIVE ME SOME ADVICE REG ENDOWNMENT I HAVE.
A FEW YEARS AGO I DECIDED AFTER RECIEVING A SHORTFALL NOTICE ON MY ENDOWMENT TO CHANGE TO A REPAYMENT MORGAGE -I DID THIS BUT COS I HAD ONLY HAD THE ENDOWNMENT SINCE MARCH 96 I DECIDED TO KEEP IN ON AS AN INVESTMENT(SORT OF) AND WAIT TO CASH IT IT TIL A BIT LATER.
HOWEVER HAVING RECIEVED ANOTHER SHORTFALL LETTER THIS TIME THE SHORT FALL IS BETWEEN £7K AND £11,250 :eek: THE TARGETED AMOUNT IS £28950.00-I AM LOOKING INTO THE MISSELLING COMPO BUT STILL WANT TO SELL/SURRENDER TO PAY OFF MY CREDIT CARDS WHICH AMOUNT TO £4,500 I PHONED UP FOR A SURRENDER VALUE AND THIS IS £4586.66 ALTHOUGH I HAVE PAID IN £5072.70.
MY POLICY IS A UNIT LINKED WITH PROFITS POLICY HELD SINCE MARCH 96.
1) DOES ANYBODY KNOW A COMPANY THAT GIVES THE BEST RATES
2)CAN I SELL/SURRENDER MY POLICY - DOES THIS AFFECT ANY COMPO DUE


ANY ADVICE WOULD BE HELPFUL'
THANKS

ReportInvestor

Hi angeleyes

CAN I SELL MY POLICY

No joy I'm afraid .

The TEP market (traded endowments) has been shrinking recently and in any case tends to deal with traditional with profits rather than unit linked with profits.

The rapidly disappearing terminal bonuses are the reason for the shrinking market in traditional WP policies, since it was the anticipated terminal bonuses that provided the incentive to buy.

If only guaranteed bonuses are going to be payable, then everyone knows roughly where they stand on a particular policy in terms of likely future returns and the cost of realising them (i.e. the future monthly payments).

And new regulations requiring firms to describe their PPFM (Principles and practices of financial management) and stick to them mean that Market Value Reductions (MVRs/MVAs/UPAs by other names) have to be based on ensuring that investors get a fairer return on the underlying asset value. This also reduces the possibilities for third party companies trading policies for a profit.

It's a fairer regime these days by and large. But that doesn't help you .

EdInvestor

What company is it with, angeleyes?

Moncs_2

I to have a simular problem with my Royal & Sun Alliance endowment which I took out in 1998, planned to make 60k, now projected to make 46k. :mad:

Not a major problem as I to are planning to change over to a repayment mortagage which means my endowment will be a nice nestegg.

After getting some great advice from Editor and a few others on another thread, I made an appointment with a financial advisor about surrendering my endowment and starting up a high interest savings account.

He suggested me to find out the value of the endowment (NOT the surrender value). The surrender value was £6262 and I suspect the acutal value is around £11k which means I would lose out on £5k (approx).
He suggested if I did surrender it and put it into a savings account I would lose out on roughly £5k and spend the next few years paying into a savings account just to make up that loss which makes perfect sense.

He gave me a list of questions to ask RSA when I call them which I plan to do over the next few days.

He suggested that Endowments although performing poorly at the moment could maintain the projected figures of around 4%.

So I think I will keep my endowment for the next few years to see what happens

EdInvestor

Hi Moncs

I'm sure you'll be much happier following the advice of your IFA.Whether or not you'll be richer remains to be seen

angeleyes

Editor wrote:

What company is it with, angeleyes?

scottish widows

EdInvestor

Since you've already moved to a repayment mortgage there doesn't seem to be much point in keeping a poor performer if you have debt - best to surrender and proceed as you suggest, as you can't sell it.

But if you plan to complain, put this in motion before surrendering the endowment.

https://www.endowmentaction.co.uk has good advice on complaints.

And if you need to replace the life cover, do that before surrrendering too.

Good luck.

dunstonh

planned to make 60k, now projected to make 46k

Nothing has really changed in that time as far as the investment goes. The projections being issued presently use lower projection percentages than those issued a few years ago. The projection does not reflect what you are going to get. It reflects what you could get if it grows at that rate.

With unit linked endowments, the projection method is relatively accurate if that percentage rate is used. It only starts getting inaccurate if the endowment charges included an increased allocation in later years. In which case, the projection would give a lower value than what you would really get.

With profit endowment projections are extremely unreliable. They do not take into account the current and potential of the with profits fund and do not include any terminal bonuses which have acrrued. They also suffer the same problem where there are increased allocation rates.

Remember that there are usually a range of investment funds available with better endowments which you could use for future redirections of premiums or consider switching your existing fund into. Because you have already paid the charges on the endowment, using the other investment funds could make it cheaper than investing in an ISA (and with no tax liability).

EdInvestor

dunstonh

I considered suggesting angeleyes looked to switch to better funds - which is always an option unit-linked endowment-holders should consider, but felt she'd really be better off using the money to pay off debt, unless she needs the life assurance.


To check on what other funds might be better, go to https://www.trustnet.com

Go to Databases, then to the "Life funds" section (for endowments) and then look up your insurance company, where the range of funds and performance over 1,3 and 5 years, should be shown.

Hint: if you are not otherwise invested in this sector, the Property fund is often a good performer

dunstonh

Sorry, I was referring to Moncs who posted later in the thread.

trademark

ive got a prudential (scott amicable) endowment ... 3 in fact ..... im keeping hold of mine and after getting a valuation it seems that at last they are picking up 3 grand payed in over the last 24 months (they are all 15 years old) and a 6k increase over that period ....

what im saying is be careful when you consider selling these ..... i got some compo (4k) but i still feel these policies have a chance , depending on your company of course , and ive got a family so the life cover comes in handy .....