Endowment Terminal Bonus

Bunnji1

Apologies if it’s already been done to death but I have a Standard Life 20yr £40k policy split with profits and managed, its due  Sept 2021.  Though reluctant, given the current climate I was thinking of cashing in as it’s not needed for my mortgage, however I believe that you receive a Terminal bonus on fruition as much as I’ve tried I cannot get any historic figures and am aware they can change. Just wondered if it’s hundreds or thousands 😉 Will I lose much or is it worth trying to see it out.. 

Thanks in Advance 
     Bunnj

TadleyBaggie

I had two endowments that matured in the 90's, on both the terminal bonus was in the region of 10K if I recall correctly. 

Bunnji1

Crikey, thank you TB, will endeavour to weather the storm then.

wjr4

Have you actually called the provider to get the current value, bonus and surrender value? Probably would be the first thing to do. 

Old_Lifer

 A terminal bonus is paid on a 'with- profits' policy.   Historic terminal bonus rates won't really help you much.

With the managed fund part,  the policy will pay at maturity  whatever  is the value of the units at that date.   Unit-linked policies often have a switch option  which may  allow the policyholder to 'lock-in' gains  and transfer to a deposit-based fund.   However,  the return on  that type of fund is likely to be very low indeed nowadays  and if markets recover to some extent  in the next year or so,  some of the recent falls may be reversed.   Only part of a managed fund is invested on the stock  market.

With regard to the 'with-profits' part,    if  you have a conventional policy  with guaranteed bonuses attaching,  these bonuses   only become payable at the end of the term or on death  within the term.   If you surrender your policy you will  only receive the current surrender value of the guaranteed bonuses.  The surrender value of the bonuses is based on the period of the term remaining,  so where a policy is about to mature in the next year or so   it would be only slightly less than  the guaranteed bonus amount payable at the end of the term.

Similarly,   if you have a unitised  with- profits policy,  a Life Office  may  impose a Market Value Adjustment   when markets are falling to ensure that  those who leave early and surrender  do  not receive more than their 'fair share' of the fund    but  where an MVA  is in place,  it is normal for this not to be applied on maturity of death.

A terminal bonus  can be altered at any time  but since only  perhaps half of a typical with- profits  fund is invested on the stock market,   any movement up or down in the rate of terminal bonus is likely to be less than the more dramatic movements seen on the stock market.

Wth a typical 20 year with-profits endowment,   the terminal bonus  is likely  to  be a significant part of the payout on maturity and would usually be more than a few hundred pounds.

[Deleted User]

Hi,

you last statement would give you an idea of value.

Have a look here for latest SL Bonus Rates.

dunstonh

Bunnji1 said:

Apologies if it’s already been done to death but I have a Standard Life 20yr £40k policy split with profits and managed, its due  Sept 2021.  Though reluctant, given the current climate I was thinking of cashing in as it’s not needed for my mortgage, however I believe that you receive a Terminal bonus on fruition as much as I’ve tried I cannot get any historic figures and am aware they can change. Just wondered if it’s hundreds or thousands 😉 Will I lose much or is it worth trying to see it out.. 

Thanks in Advance 
     Bunnj

The final bonus accrues are you go along.   It is not left until maturity.  However, a final assessment is done at the time and that can lead to a small increase.   What is more important is the Mortgage endowment promise (MEP). That is usually worth many thousands and is lost if you do not stay until maturity.  The MEP is not included in the statement values or projections.  It is an additional amount.

Old_Lifer

The rate of terminal bonus depends upon the length of time the policy has been in force.   A  Life Office will have a range of terminal bonus rates for the same type of policy.    The longer the term of the policy,  the higher the rate of terminal bonus at maturity.

It is quite normal  for two  endowments of the same type  and with the same term and premium  to produce different payouts at maturity.    The return you get   at maturity will depend on your age when you took-out the policy  and whether you are male or female,  since an endowment is a life assurance policy  and these  factors  would have effected the cost of the life cover.     All other things being equal,   the younger you were when you took-out the policy the higher the payout you will receive at maturity  and since  women would have had cheaper  life cover,   a woman would receive a higher payout than a man of the same age.

Bunnji1

wjr4 said:

Have you actually called the provider to get the current value, bonus and surrender value? Probably would be the first thing to do. 

wjr4
Yes spoke to them today and they quoted me value £24,700 ish surrender value £29,960
regards.

 Bunj

Bunnji1

dunstonh said:

Bunnji1 said:

Apologies if it’s already been done to death but I have a Standard Life 20yr £40k policy split with profits and managed, its due  Sept 2021.  Though reluctant, given the current climate I was thinking of cashing in as it’s not needed for my mortgage, however I believe that you receive a Terminal bonus on fruition as much as I’ve tried I cannot get any historic figures and am aware they can change. Just wondered if it’s hundreds or thousands 😉 Will I lose much or is it worth trying to see it out.. 

Thanks in Advance 
     Bunnj

The final bonus accrues are you go along.   It is not left until maturity.  However, a final assessment is done at the time and that can lead to a small increase.   What is more important is the Mortgage endowment promise (MEP). That is usually worth many thousands and is lost if you do not stay until maturity.  The MEP is not included in the statement values or projections.  It is an additional amount.

     MEP
      To be frank I wasn’t even aware of it 
       Many Thanks

Bunnji1

 Not long to go now.

A glance at the app shows a value of £34,341 as of 26th Aug. 

Matures 26th Sept.

Await with bated breath. 

TY for your input.

  Bunj