Endowment Policy Advice/guidance

Skindog72

Hi All, Just looking for some advice/guidance regarding a Endowment policy that is due to mature in 2 years (April 2025)
The policy was set up to cover an old mortgage of £31k and set up with Allied Dunbar (Now Zurich and called a Homeowner Plan) and the policy is on track to mature at approximately £32k.
The current surrender value is £25.5k and this is where we know very little.
If markets decline how much could we stand to lose? Is it worth surrendering now or continue to let it run?

Other info
We pay £66 a month into this policy so left to pay over the next 2 years is around £1600
We don't need the money urgently but we also want to try and protect it as best as possible. 

Any advice/guidance give is greatly appreciated. 

masonic

Based on what you have said, you stand to lose approx 20% if you cash in now. It is unlikely you'd make that back by saving or investing the proceeds over 2 years. Policies like this often have significant final bonuses that are forfeit when you cash in early.

allegro120

Skindog72 said:

Hi All, Just looking for some advice/guidance regarding a Endowment policy that is due to mature in 2 years (April 2025)
The policy was set up to cover an old mortgage of £31k and set up with Allied Dunbar (Now Zurich and called a Homeowner Plan) and the policy is on track to mature at approximately £32k.
The current surrender value is £25.5k and this is where we know very little.
If markets decline how much could we stand to lose? Is it worth surrendering now or continue to let it run?

Other info
We pay £66 a month into this policy so left to pay over the next 2 years is around £1600
We don't need the money urgently but we also want to try and protect it as best as possible. 

Any advice/guidance give is greatly appreciated. 

In current environment and the age of your policy it is probably better to let it mature.  

I had the same endowment policy with Allied Dunbar which turned into Zurich for £35k.  Payed my mortgage off early, but decided to keep the policy paying similar amount a month (I think it was £57).  When I was made redundant in 2015 I've decided to surrender and put this money into savings accounts, got more back than I put in - at the time it felt better to be in control of my money rather than relying on the "will of markets". 

dunstonh

If markets decline how much could we stand to lose? Is it worth surrendering now or continue to let it run?

Markets have declined. 2022 was a negative year.   So, if you surrendered it now then you would be doing so after a recent drop.

It could drop again.  There have around 5 consecutive negative years in the last 50.  They are not common but they do happen.

Albermarle

If markets decline how much could we stand to lose?

Or to be more positive, you could ask ' if markets go up, how much more than £32K might we get ?'

On average over a 5 year period markets are more likely to fall than rise, especially as said, 2022 was a down year.

Nothing is guaranteed of course, but on balance seems better to keep it to maturity.

Voyager2002

Albermarle said:

On average over a 5 year period markets are more likely to fall than rise, especially as said, 2022 was a down year.

Is that what you meant to say? Or did you mean to type the opposite?

Albermarle

Voyager2002 said:

Albermarle said:

On average over a 5 year period markets are more likely to fall than rise, especially as said, 2022 was a down year.

Is that what you meant to say? Or did you mean to type the opposite?

Well spotted, it was a mistake. I should have said over a 5 year period markets are more likely to rise than fall !

Skindog72

Thanks for the replies, I guess we will let it ride till the end. 

poseidon1

Skindog72 said:

Hi All, Just looking for some advice/guidance regarding a Endowment policy that is due to mature in 2 years (April 2025)
The policy was set up to cover an old mortgage of £31k and set up with Allied Dunbar (Now Zurich and called a Homeowner Plan) and the policy is on track to mature at approximately £32k.
The current surrender value is £25.5k and this is where we know very little.
If markets decline how much could we stand to lose? Is it worth surrendering now or continue to let it run?

Other info
We pay £66 a month into this policy so left to pay over the next 2 years is around £1600
We don't need the money urgently but we also want to try and protect it as best as possible. 

Any advice/guidance give is greatly appreciated. 

You state your policy is on track for the stated maturity in 2 years.

 Zurich will have sent you annual colour coded maturity projection letters specifying whether this is the case. Only  green letters are reliable indicators that maturity proceeds are on target. Have all your letters ( including the most recent) green? Amber or red letters signify maturity targets are likely to be missed.