should I cash in Endownment now.

Pq127

Hi, looking for some advice please.
Our endownment is due to mature next April.
The current cash in amount is not as bad as earlier predictions, though still short of the £30k intended. We changed to repayment, so dont need it now for the mortgage.
In view of the economy and Covid, we are thinking we should cash it in now incase shares and economy go down into predicted recession - what is the opinion of others please?
Its with Standard life and is 50/50 Life with Profits Fund / SL managed Life Funds.
Thanks
Peter

Voyager2002

An endowment policy is designed to have a stable value, and so is not very sensitive to share prices at the time it matures. So no matter what happens to the economy, it cannot give you less on maturity than what it would give you if cashed in a year early.

Under normal circumstances, an important part of the payout on maturity is made up by what is called a terminal bonus. If the economy and share values are very poor around the time of maturity then the terminal bonus can be reduced to a small amount. Of course, if you surrender even one day before maturity then you miss out completely on the terminal bonus.

Old_Lifer

A typical with-profits fund  may  only  have  around  half of its investments in the stock market nowadays  (it was often higher  years ago).     Similarly, only part of a managed find will be invested in shares.

With the managed fund,   it will be worth  at maturity  whatever is the value of the units on that date.   So at maturity you could receive  less than the current value if the unit price falls  but receive more if the unit price rises.    There is normally no terminal bonus payable on a unit-linked policy.

With  the  with-profits  fund,  there is usually  a terminal bonus paid at maturity  and it is usually a sizeable portion of the payout.   If you decide to terminate your policy by surrendering it,  you will receive the surrender value of the current terminal bonus applicable to your policy.     Since only part of a with-profits fund is invested on the stock market,  any cut in terminal bonus rates is likely to be less than the fall in the share index.

                

blue_max_3

Nothing stopping you getting a cashing in value. But I think I'd be more inclined to let it run it's course now as you're so close.

dunstonh

The current cash in amount is not as bad as earlier predictions,

Providers do not give predictions.  Prediction is something that is likely to happen.   They give projections.  These are artificial figures using a range of assumptions as examples.    Projections have been largely understating reality for many years.  Indeed, in some cases projections have actually provided lower values than the guaranteed minimum maturity value.

In view of the economy and Covid, we are thinking we should cash it in now incase shares and economy go down into predicted recession 

We are in a recession and markets reacted to Covid in February this year.   However, recessions and stockmarket falls do not necessarily go hand in hand.

Standard Life plans that have the WP fund usually have a mortgage endowment promise payout to add on top of the maturity value.   If you surrender early, you lose that MEP.

Pq127

thanks to all replies.