endowment compensation??

Katykat

Before all the trouble with endowments, we converted our mortgage to repayment & paid it off 4 yrs ago. We kept the endowment ( taken out in 1989)as investment. We have had 2 "red" letters now informing us of a shortfall of £5000 (@6%) As we had paid the mortgage off, we have not done anything about it. However, we have a leaflet given to us in 1998 showing possible returns of £*****. At the time of taking it out we were told to expect a return of around £******but we do not have this in writing. At present the expected return is £****** Is it still advised to claim compensation, as we thought that we had not been knowingly mis sold the policy, and we have no written proof. Also, we have now paid off the mortgage, but are still paying £71 pm premiums. The policy is with Norwich Union now, but was originally General Accident. Is is worth hanging on for the Terminal bonus, though I think the projected amount of ***** includes this?
:j

EdInvestor

Hi jennand

Post a few figs and we can take a look

Guaranteed sum assured
Total bonuses
Surrender value
Maturity date

we have a leaflet given to us in 1998 showing possible returns of £116,000.

What percentage return was that projection based on?

defender_of_the_weak

If you think you were mis-sold then you should complain. NU have announced that they will be barring complaints in the future so do not wait

Katykat

Thanks EdInvestor, here's the figures. Guaranteed sum assurred £***** (life cover £*****) Total bonuses to date, £***** Surrender value as at 12/5/03 £***** Maturity date May 2009.The latest projections as at April 05 are :- 4% --£*****: 6% -- *****: 8% -- *****

dunstonh

Doesnt seem that far off target.

If it makes no more money, you get £14,212 plus £10,119 = £24331.

That probably doesnt include any terminal bonuses accued, although that would need verifying on the paperwork. NU are increasing their rates again and terminal bonuses are being added again. I would estimate that somewhere between 4% and 6% is likely with NU as they are one of the better players. If the final bonus is then added to that, you could find there is no shortfall. If the final bonus is included, then you are looking at a likely shortfall.

Refer back to your paperwork and see if the final bonus is included. Its possible it may not tell you or make it clear. Often i have to check with a serviceline or online to confirm these things as the paperwork doesnt make it clear.

At the end of the day though, it is still a crystal ball job. We can estimate what it might do but no-one can tell you for sure.

Katykat

Thanks Dunstonh, yes the figure does include annual and terminal bonus. We are considering claiming and then making a decision if & when we are succesful, based on the amount offerred. We have to try to balance the amonut we would save on paying no more premiums against the fact that we would possibly need a life assurance policy to replace the endowment. As you say though, we would need a crystal ball and we have no way of knowing at the end of the day if we made the right decision. It is a BIG letdown though isn't it when 16 yrs ago we were told to expect around £***** and now it's likely to be less than £*****

EdInvestor

Hi jennand,

Looks like this is one to keep, but you should update the S/V to be sure.

If you surrendered it and put the 14,872 in the bank @4% and also paid in the premiums for the years to maturity you would get 21,094, which is significantly below the guaranteed amount of 24,331 you would get if you held onto it.

This sometimes happens with old policies where the company has been over-generous in your favour with the guaranteed bonuses in the past.

But do check the S/V number.If it's gone up (unlikely) come back to us.

Katykat

Whats the s/v number edinvestor?

EdInvestor

Sorry jennand, I wasn't clear,you said:

Surrender value as at 12/5/03 £14,872

Which is more than 2 years ago.I think you should update this S/V just to make sure the analysis is correct.

It's not that often, you understand, that the recommendation is to hold on to an endowment Are we sure the figures are right?

Katykat

OK Edinvestor, I've just rung NU for an updated S/V, & am quite surprised to find that it is £***** I'm glad you suggested this as it might influence our decision. Of course we will lose nothing by applying for compensation, then if it's granted, depending on the offer, we can take the decision then. Any more advice?

EdInvestor

EdInvestor wrote:

Hi jennand,

Looks like this is one to keep, but you should update the S/V to be sure.
If you surrendered it and put the 14,872 in the bank @4% and also paid in the premiums for the years to maturity you would get 21,094, which is significantly below the guaranteed amount of 24,331 you would get if you held onto it.

With the updated S/V, the outcome now looks higher for the surrender, with 25,317 if saved in the bank , vs the guaranteed value of 24,331. Their projection at 4% is 26,800 which suggests there is still a chunk of TB in there.

Two things would be worth knowing:
-what percentage of terminal bonus is in the surrender value.This is not guaranteed and could disappear, on the other hand it mightrise

-Would you need to replace the life cover?If so the cost needs to be taken into account and would probably indicate keeping it.

There's really not a lot in it as far as I can see.

What you could do is monitor it over the next 6 months and see whether the surrender value is rising or falling (after netting out your new contributions).If rising, hold on as that should mean the TB cuts have bottomed out, if falling,that means they are still cutting the TB, so you should take what's left of it and go.

Sorry it's not more clear cut.