Cash In Endowment ??

RaverSaver

I have recently been sent an information letter regarding an endowment I have. It advises me there is a high risk of a shortfall (surprise surprise!) However, I fortunately no longer require it to cover a mortage. Can anyone advise if I would be better to cash in the endowment or to leave it the few more years to its surrender date and keep paying monthly payments.

dunstonh

It advises me there is a high risk of a shortfall (surprise surprise!)

Why surprise surprise? There are plenty in a surplus position. Some of which only show a high risk just to get the time bar clocking ticking are not really in a shortfall position at all.

There are naff endowments and there are excellent endowments. Sometimes it isnt always easy to tell the difference unless you know what to look for.

Can anyone advise if I would be better to cash in the endowment

Tell us about the endowment and we can give an opinion.

dweeby

RaverSaver wrote: »

Can anyone advise if I would be better to cash in the endowment or to leave it the few more years to its surrender date and keep paying monthly payments.

I'm in the same position, and the best advice (although I'm no financial expert) is to let it run its course. As far as I know, the only time that this wouldn't apply is if you were desperate for some cash (eg you lost your job).

Generally, early surrender values are low, and completed endowment mortgages also get a terminal bonus.

If you do decide to surrender it, there are companies that buy them and pay more than just the company that sold it to you.

dunstonh

I'm in the same position, and the best advice (although I'm no financial expert) is to let it run its course

No its not. That is an old wives tale that was spread round by tied agents in the past as they were not authorised to recommend cancellation or surrender. Only IFAs can do that.

Generally, early surrender values are low, and completed endowment mortgages also get a terminal bonus.

Not necessarily but potentially.

You are right in some respects but could be wrong in others. Its not clear cut what you should do until the facts are known. A bad endowment is worth dumping. A good endowment is worth keeping. An endowment with a shortfall warning doesnt mean its heading for shortfall.

Dick_here

dweeby wrote: »

Generally, early surrender values are low, and completed endowment mortgages also get a terminal bonus.

Generally, yes, but...

Maturity payouts are also - generally - falling. If you're more than half way though a 25 year term, say, enquire as to the current surrender value and possible maturity. It may be that it is already quite high, and by the time you add on the remaining premiums to that, the difference between current surrender and possible maturity isn't that large.

In which case, surrendering and paying the premiums into an Isa instead is no bad idea - if you don't need the life cover.

dweeby

dunstonh wrote: »

No its not. That is an old wives tale that was spread round by tied agents in the past as they were not authorised to recommend cancellation or surrender. Only IFAs can do that.

Oooer! that's news to me...

I'll have to check mine out, I've been continuing to pay it - possibly under faulse pretenses...