Endowment Concerns

jam_jar123

I took out an endowment mortgage in 1995, mid oct. The policy matures this year. The mortgage that I took out was for £74k and I brought it down to £50k by making over-payments. In Jan 2020, the value was £44k but since coronavirus, it's dropped to £36k. I've been told by Halifax that it's not 'with profits' and when I look at the yearly bonuses, it's only a handful of pounds. Is there any chance that the policy value will go back to the Jan 2020 value by mid Oct?
(The 1995 endowment was for £52k. I had an older endowment which was for £22k. That matured around 5 years ago, paying out £18 - I used this to pay off some of the loan amount and used savings of £6k.)

Old_Lifer

If it has yearly bonuses added, this indicates that it is with-profits.   May is suggest that  you look at your documentation.

We have had other similar enquires in the last few days.

If you click on my user name,  then click on 'replies'  you need only go a short way down the list  to find replies  to similar threads.

dunstonh

I've been told by Halifax that it's not 'with profits' and when I look at the yearly bonusses, it's only a handful of pounds.

If i isn't with profits, there should be zero yearly bonuses.       If you are seeing bonuses, then it is with profits.

Halifax is not the contact point for any of the endowment policies they sold.  If it was a Standard Life policy then you should contact standard life.  If it was a Halifax life policy then you should contact Scottish Widows.  Halifax life was a unit linked company.  Not a With Profits company.  Standard Life though did both.

So, who is your policy with?

Is there any chance that the policy value will go back to the Jan 2020 value by mid Oct?

Yes.  There is a chance.  However, I wouldn't expect it.   Markets are not expected to recover until the world is working again.  That means not only getting past the peak infection point (which is expected to be June in the UK) but also getting to the stage where there are no reported new cases.   So, that is probably September or later.  There may be some recovery  once the markets see a trend.   

jam_jar123

When I asked them about this last year, they said it wasn't with-profits. I then asked for a breakdown and they included a minuscule amount for bonuses. I'll write to check out but I'm sure the paperwork says I've to get a yearly bonus and final bonus but couldn't see anything about with-profits.

Old_Lifer

As dunstonh says,  you need to ask the Life Office which issued the policy and not the mortgage  provider.

The staff of a mortgage provider on the local high street  will probably be clueless,   especially if a policy was taken-out 25 years ago.

rob111

Hi
Sorry to hear about your problem, mine is similar unfortunately.
My endowment policy matures Jan 2021 to pay off a £35k mortgage.
End of Jan this year it was worth £37k - yesterday the cash-in value was £31k.
It is frustrating though of course a very small problem compared to some caused by this crisis.
I am tempted to cash it in ASAP and make it up to £35k with some savings.
It seems like a big gamble not to do this and to hope it will recover above £35k by Jan 2021 - what if it slips down to £25k for example?
Am really not sure what to do!

dunstonh

It seems like a big gamble not to do this and to hope it will recover above £35k by Jan 2021 - what if it slips down to £25k for example?

Markets are down around 35%.  You are down 16%.

Using that as a guide, you would need to drop 32% in value.  That equates to a market drop of around 70%.  So, that would be a bigger drop that the Great Depression (the largest drop in the last 100 years).  Yet so far, the drop isn't as big as either the credit crunch or the dot.com period.   The current drop is about 6th in the last 100 years and 3rd in the last 20 years.

rob111

Thanks dunstonh.
That puts it into perspective very well.

jam_jar123

rob111 said:

Hi
Sorry to hear about your problem, mine is similar unfortunately.
My endowment policy matures Jan 2021 to pay off a £35k mortgage.
End of Jan this year it was worth £37k - yesterday the cash-in value was £31k.
It is frustrating though of course a very small problem compared to some caused by this crisis.
I am tempted to cash it in ASAP and make it up to £35k with some savings.
It seems like a big gamble not to do this and to hope it will recover above £35k by Jan 2021 - what if it slips down to £25k for example?
Am really not sure what to do!

Just the way things are I suppose but it's still upsetting. My gut instinct is to ride it out; if I do ride it out, I'll email you to let you know how it did, as my one matures in Oct 2020, 2/3 months before your one.

rob111

Thank you - would appreciate it

jam_jar123

rob111 said:

Thank you - would appreciate it

No probs but want to point out I'm not finance savvy so might be an idea to get some advice from the experts. I'm a healthcare worker who was hoping to retire a bit earlier, once my mortgage had been paid off