Endowment Maturing during Lockdown

louford

I had an Endowment policy with Scottish Widows with a maturity date in June 2020. The value of the policy has plummeted by 25% during the Covid crisis, so I contacted Scottish Widows to see if I could extend the policy (continue paying into it), or suspend the maturity date (just leave the funds in the policy) until such time as the market recovers. I have been told that I have no options, and the policy must mature on the maturity date and be paid out and I must take the losses. I insisted on getting that in writing from them. Is this correct? Do I have grounds for complaint?

Socajam

Doubt it, but others may think differently.
Just because the market is down have nothing to do with the maturity date - which is a set date.

penners324

What was it invested in? My pension fund has nearly recovered to what is was prior to Covid.

davidmcn

louford said:

I insisted on getting that in writing from them.

It's already in writing, in the policy. That's how they work.

Jack_Cork

I guess it depends on the T&C's. I had an old Dunbar (Zurich) 25 year policy mature last year and I had the option if leaving it for another X amount of years if I wanted to 

Old_Lifer

It is as  Socajam   and   davidmcn  say.  

When the policy reaches  the maturity date stated in your policy it becomes payable.   Is this unit-linked ?  If so,  it will probably  allow you to switch funds   in which case you may have been able to de-risk by switching to a deposit-based  fund  to lock-in gains as maturity  approached.     If you expect markets to recover,  you are of course free to invest the maturity proceeds elsewhere and benefit from any market recovery.

Some  whole life policies with premium payment terms  did allow,   at the end of the payment term,  the  proceeds to  be taken  or left with the  Life Office.     For a brief period  (often  one month) a  MVA would not be applied.     Sometimes  premium payments would be  continued  for  a further 10 years  (to keep within  the Qualifying Rules).

Old_Lifer

my post should read   'payments  could  be continued '.       Computer playing-up again !

dunstonh

The value of the policy has plummeted by 25% during the Covid crisis, so I contacted Scottish Widows to see if I could extend the policy (continue paying into it), or suspend the maturity date (just leave the funds in the policy) until such time as the market recovers.

Most investors are now either back in surplus or not far off where they were before the crash (depending on risk profile and asset mix).     

 I have been told that I have no options, and the policy must mature on the maturity date and be paid out and I must take the losses. 

Correct.  If it didn't it would cease to qualifying under HMRC rules.  However, nothing stops you investing the maturity in an S&S ISA and unwrapped funds (if above the ISA allowance)

 I insisted on getting that in writing from them. Is this correct? Do I have grounds for complaint?

Yes it is right.   And no you do not have grounds for complaint.  Scottish Widows cannot break the law no matter how much you complain about it.

I guess it depends on the T&C's. I had an old Dunbar (Zurich) 25 year policy mature last year and I had the option if leaving it for another X amount of years if I wanted to 

Was it a MIP or an endowment?  Was it qualifying or non-qualifying?

Virtually all mortgage endowments are qualifying.   You cannot extend the term without breaking the qualification rules (set by HMRC).   However, some plans did have rollover options. i.e. the old policy would mature but could be rolled into another plan.  However, since endowments (and MIPs) are obsolete, many providers pulled their rollover products.    non qualifying plans could be extended as often as you like.

louford

Thanks all. My sister rolled her endowment over for another 2 years without any hassle. I supposed I could do the same. 

dunstonh

louford said:

Thanks all. My sister rolled her endowment over for another 2 years without any hassle. I supposed I could do the same. 

That would be break the qualifying rules and lead to potential increased taxation.  SW have already told you that they do not offer that option.
Was your sister referring or the mortgage or the endowment?  (or did she have a PEP/ISA mortgage instead?)