Endowment As A Saving Policy

aspiers

When I moved house 5 years ago, I switched to a Virgin One mortgage but kept my S.Life endowment policy going. I am now wondering whether it is worth doing this or if it is worth cashing in the policy and using the money to reduce my mortage.

The figures;
Endowment : £50k
Monthly endowment payments: £60
Years left : approx 13
Current value: approx £8500
Mortgage: £40k

Any one got any thoughts on this ?

Thanks.

alexei_2

Standard Life are in the process of de-mutualising so assuming your endowment is a with-profits policy then I would suggest that you wait until you receive the windfall payment, and then review your options at that point. I think the timetable for de-mutualisation is a year or so.

dunstonh

lots of threads on standard life over the last fortnight. please read those as i am not sure I have the energy to repeat the same information again in such a short period. ;D

PaulGeary

aspiers
I am in a similar scenario and I cannot totally make my mind up.
My head says don't panic and jump ship just yet.

However there have been two pieces of negative news from SL in the past 2 weeks on top of the fact that the shortfall on my policy is over 30%.

The good news is that they cannot mess it up any more, 4% growth will not even reach my guaranteed amount so i am OK there, no worse. Secondly my final bonus is now only £227.40 so thats as much as I could lose,
or is it? ermmmm

ps: I wondered if I make my SL endowment payments until after windfall say £74x 24 months=£1776, will my SV be £1776 more then, than it is now?
If not I will have been sh_fted again!

morlandbanks

I have a similar query. We've had an interest only mortgage for 5 years and an endowment policy. The shortfall isn't too much at the moment - about £2000, but we've decided to re-mortgage and switch to a repayment just in case.

My query is, do I cash in the endowment now (we've paid in just over £10,000 and it's valued at almost £7,000), and use the cash to reduce the mortgage by that amount. Or they have said I can reduce the endowment payment to just £15 a month and it will be worth £17,000 after 15 years, or £22,500 after 20 years. This would be a savings plan for our children to go to uni or whatever.

Seeing it written down, it seems the obvious choice to keep it going as a savings plan, but is there anything I'm missing? I'm clever at keeping to a budget and everything, but when it comes to these major decisions, I'm a bit nervous!

Thanks for any advice! :-/

dunstonh

We've had an interest only mortgage for 5 years and an endowment policy. The shortfall isn't too much at the moment - about £2000

A projection after year 5 is not much use to anyone. The charges for the plan are taken out in the first 12-24 months so you would automatically have a shortfall as the target growth is an average over the term. You havent had any in that initial period.

Is yours unit linked or with profits? if unit linked, what funds is it invested in?

Potentially, an endowment with a low target growth rate, started 5 years ago and investing in unit linked funds isnt in a bad position for the future. Much better than those started 10 years ago.