Endowment - cash in or sit it out?

Seatoner

Hi All,
I took out an AXA (now with Aviva) 25 year with-profits endowment in 1997 intended to be a vehicle to pay off a £33k interest-only mortgage; as a result of all the endowment performance 'hoo-ha' in the years soon after, I fully repaid the mortgage capital and kept the endowment going, it's due to mature in August 2022.  I've since moved and took out another mortgage which has approximately £30k left to pay, ideally the lump sum from the matured endowment will be used to pay this off next year.

My most recent statement from July last year gave a cash-in value of £33009, consisting: Units value £18482, Final bonus £13677 and Reorganisation Bonus (for policies taken out before 2001) of £850.
My concern is what will happen if in the coming 18 months the shtf and the stock market takes a massive turn for the worse, i.e. how much of the £33009 current cash-in value is 'banked' or 'safe', and what would be the worse case scenario with regards to potential loss?

dimbo61

Would you lose the final bonus £13677 if you cashed it in early ?
Maybe contact Aviva direct and ask them what is the surrender value now.
Work out how many more payments( IE 17 X monthly premium)  you will make to August 2022 before you call them  and go from there 

dunstonh

The unit value cannot go down.  However, the final bonus can go down as well as up and potentially fully removed in an extreme drop.
You cannot predict returns.  There will be good years, nothing years and negative years.  You never know what is coming.

So, you have the choice of surrendering the endowment now its hit target early or leave it where it is hoping it makes more.  Its a judgement call.
Check the surrender value is not penalising you for early surrender. If its the same as the current value (inc final bonus) then its good to surrender without charge.

Old_Lifer

The surrender value you have is from the middle of last year.  Why not get a new surrender value quotation so you know where you stand currently.

At maturity your policy will have been in force  two years longer than last July,  so you will receive a higher rate of final bonus but the risk you face is that overall rates of final bonus may change (up or down) by the time your policy matures.    However, only around half of a typical with-profits fund is invested on the stock market nowadays. 

As has been said, you cannot predict future returns.