Endowment About to Mature

Jenga12

My endowment will mature soon. I did the sensible thing and started to pay off the capital from around 8 years ago and there's about 8k left. The endowent fund team say that I can extend the plan as long as the mortgage is extended. I don't think the plan follows ftse entirely but certain aspects do eg, before covid, it was valued at 6k more than it is now. I've been paying in approx. £100 each month for the last almost 25 years.
Should I extend it, to see if the plan can get a higher value, post covid hopefully?

dunstonh

The endowent fund team say that I can extend the plan as long as the mortgage is extended.

That is unusual as that could make the plan non-qualifying. (i.e. potential tax)

 I don't think the plan follows ftse entirely b

Hopefully it doesn't follow it at all (assuming by FTSE you mean FTSE100 and not another FTSE index).  The FTSE100 is a consistently poor quality index that is best avoided

before covid, it was valued at 6k more than it is now

Most investors are now back in surplus to their pre-covid values unless they have a high UK equity content. That can be the case on old fashioned investing but not popular for the last few decades.

Should I extend it, to see if the plan can get a higher value, post covid hopefully?

S&S ISAs beat endowments in terms of tax efficiency.   I would also be concerned about changing an endowment term in respects of qualifying rules.   If you want to keep paying money in the future, then taking the endowment on maturity and clearing the mortgage but still paying monthly then either pension or S&S ISA wrappers would likely be better.

Jenga12

Thank you for the reply, much appreciated. It's not back to pre-covid value. It's an old Halifax one, which I think is in UK Equity.

Old_Lifer

When you say you can extend the policy, do you mean you can leave the proceeds with the provider at maturity or do you mean you can continue premium payments after maturity ?    Extending a policy beyond the premium payment term  specified in the policy is rare,  for the reason outlined by  dunstonh.      The option to continue premium payments at the end of the premium term is most commonly found  in unit-linked whole life policies sold in the 1990s and will usually allow the policyholder to continue premium payments for a further 10 years  or for a further period of at least 10 years   (in order to keep within the Qualifying Rules).

May I suggest that you look at the documentation issued when you took-out the policy.  This will set-out any options at maturity for the product you have.

I am surprised that the product appears to be invested 100 percent equities.    One of my friends in the early 1990s was an independent mortgage broker and explained to me at the time,  that most mortgage providers required a  with-profits or managed fund policy as a repayment vehicle.   It seems that many regarded  100 percent equities as high risk, as it was felt few policyholders were likely to de-risk  as the end of term approached and would leave themselves open to  a sudden stock market fall just before

maturity

Jenga12

Old_Lifer said:

When you say you can extend the policy, do you mean you can leave the proceeds with the provider at maturity or do you mean you can continue premium payments after maturity ?    Extending a policy beyond the premium payment term  specified in the policy is rare,  for the reason outlined by  dunstonh.      The option to continue premium payments at the end of the premium term is most commonly found  in unit-linked whole life policies sold in the 1990s and will usually allow the policyholder to continue premium payments for a further 10 years  or for a further period of at least 10 years   (in order to keep within the Qualifying Rules).

May I suggest that you look at the documentation issued when you took-out the policy.  This will set-out any options at maturity for the product you have.

I am surprised that the product appears to be invested 100 percent equities.    One of my friends in the early 1990s was an independent mortgage broker and explained to me at the time,  that most mortgage providers required a  with-profits or managed fund policy as a repayment vehicle.   It seems that many regarded  100 percent equities as high risk, as it was felt few policyholders were likely to de-risk  as the end of term approached and would leave themselves open to  a sudden stock market fall just before

maturity

It's a Halifax life one. There are 3 funds, foundation/balanced/ can't remember the 3rd one. It's taken over by Scottish widows. I've asked for more specific details but I feel I'm being fobbed off as they say, "you're investing in funds within funds". He said " its like the ABI fund". If I ask for specific companies I'm investing in, should they be able to provide that information?

Old_Lifer

Is this a product called a ' Personal Investment Plan' ?      If I remember correctly, there, was such a product which was not an endowment but  a non-qualifying whole life policy and was open-ended.   Is it the mortgage which is nearing the end of term  and not the investment ?    You really need to look at you original documentation to see  exactly which product you have.

I would expect  details of each fund would be available on request.

Jenga12

Old_Lifer - it's an endowment called a mortgage repayment plan. They said it's a qualifying plan so non taxable. They said I could extend the plan as long as the mortgage was extended. But will probably keep it simple by not extending the mortgage and so taking whatever the plan value is on maturity and using that to pay off the outstanding amount on my interest only mortgage.