Endowment compensation offer

EdInvestor

Certainly it's a couple of years since I looked at the figures for specific cases, and interest rates have gone up quite a bit since.

Then again, they are now coming down again.:idea:

Timing could perhaps be important for the best outcome.

As dunstonh says, life cover is another factor. If you were sold unnecessary life cover ( eg because you already had it in a company pension) then your compensation should be higher - that might be something to point out, dibbs, if it hasn't already been taken into account.

dbs

Good point about life assurance,at the sale of the policy I was unaware of the life assurance in my pension which is three times my actual annual earnings which would have been enough to pay off the original loan.
Not sure about my wife`s pension as it was a dual policy.

I think Froggit is right about the calculation.

The endowment was actully more money than a repayment by about £9 per month but I do not have any proof of this, was this due to the dual life assurance policy?

In the letter of compensation it states I do not have to surrender the policy but if I dont any endowment shortfall is my fault.

My current endowment is paying 3% at 4% it is showing a £6200 shortfall in five years time (minium payment is £11,122 for the £20,000 loan) on this basis I would surrender or sell the policy but is it worth keeping it for the terminal bonus? which may or not be paid.Are companies paying out terminal bonuses on maturing policies and what amounts? does anyone know?

The compensation amount when compared to others I have managed to find out seems ok.

EdInvestor

Post some details about the endowment:

Company it's with
Guaranteed sum assured
Monthly premium
Maturity date
Surrender value

The position on TBs is highly variable.

dbs

Company,Axa equity and law

Guaranteed value £11,122

Monthly Premium £33.15

Maturity date 4/12/2010

Current surrender valve £9,667.94

66 payments left at £33.15 =£2,187.90

Projected shortfall @4% £13,800

Lowest possible growth per year 3% which is being paid at the moment.

EdInvestor

If you surrender and place the proceeds in the bank also paying in the premiums to maturity you should end up with c.14,500, siginificantly more than the guaranteed value.

Can you find out if there is still any TB left in your policy?If it has all gone, then with a projection rate of 3%, I wouldn't expect it to return.What is the WP fund invested in?(the percentages of bonds,equities etc.)Is it closed to new business? If a low percentage of equities , and closed, then these would be indicators an exit would be the likely best route.

dbs

On the surrender value there a chargeable gain of £2711 which has to be declared to the tax man would I be taxed on this amount?

I earn £23500 a year.

My wife has no income.

dunstonh

With that income, there would be no further tax to pay. Had you been a higher rate taxpayer, then there would have been.

dbs

If I surrender the endowment this will end my life assurance as well.

Thinking of buying a different property at the moment can I use my pension life assurance which pays out £60000 to cover a £30000 loan?or would any mortgage broker insist on separate life assurance.

dunstonh

life assurance is life assurance. They cannot insist upon it and you can choose to use exisiting life cover if you wish.