FP Endowment - cash in ??

MTW_2

Hi I would be grateful if someone with expertise would be able to advise me.

I have a Friends Provident Endowment policy covering myself and my wife - joint life first death.
It is an old policy that I do not need to to pay off my house so I am just interested in the pure financial implications. (kids at uni fund)

Last year the minimum guaranteeed cash sum was £18,090.37 and this year it is £18,109.64 so an increase of just over £29 in a year.

Maturity date - Feb 2011
Surrender value £17,663
Target amount £29.950
Projected value at maturity
4% £20.600
5.5% £21.500
8% £23.000

Monthly payment £39.64 so I will be paying in roughly £1400 more over the next three years.
So do I cash in or let it run to maturity ?

Trying_to_be_good

Loks to me like you'll be getting £3,000 more (at 4% projected growth) for putting in £1,400 over the next three years - that looks to me like more than doubling the contribution you're making and a good return, so I'd keep it.

Gorgeous_George

Ed will want to know what your mortgage rate is and dunstonh will want to know if there is a mortgage promise value (or is that just SL policies).

To me, it looks a no-brainer for cashing-in.

GG

EdInvestor

MTW wrote: »

Projected value at maturity
4% £20.600
5.5% £21.500
8% £23.000

If you cashed this one in and put the lump sum in a deposit account, also paying in the premiums to maturity and earning an average net 5% over the period you would end up with a guaranteed 22,001.

The FP fund is very unlikely to return more than 5%, ie around a thousand quid less, and of course it's unguaranteed. So one for the bin IMHO.

Replace the life cover before surrendering if you need it, as per usual.

EdInvestor

Gorgeous_George wrote: »

dunstonh will want to know if there is a mortgage promise value (or is that just SL policies).

SL and NU - but they were the biggest endowment providers, that's why it crops up so often.

To me, it looks a no-brainer for cashing-in.

Agreed.:)

andysdad_2

MTW I have a similar policy.
Do any other of the experts on the site have a view of Friends Provident WP endowments? Do they have hidden value not shown in the projections or should they be sold as proposed by GG and Ed.

dunstonh

Many of FP's endowments allow free switching into their unit linked range. That can increase the potential. if that option doesnt exist then there is little potential in the FP WP fund and not a desirable option.

brannyrhino_2

EdInvestor wrote: »

If you cashed this one in and put the lump sum in a deposit account, also paying in the premiums to maturity and earning an average net 5% over the period you would end up with a guaranteed 22,001.

The FP fund is very unlikely to return more than 5%, ie around a thousand quid less, and of course it's unguaranteed. So one for the bin IMHO.

Replace the life cover before surrendering if you need it, as per usual.

And what about the terminal bonus that they will probably pay out.
I hope to god you do not advise on financial products for a living.:eek:

Find out the full facts before giving advice.

MTW
Ring Friends tommorrow and ask them if a similar policy had matured this month what would the Terminal Bonus have been. Terminal Bonus are not guaranteed but you need an idea of what they are currently paying so you can make an informed decision.

dunstonh

I hope to god you do not advise on financial products for a living.:eek:

No she doesnt.

EdInvestor

brannyrhino wrote: »

And what about the terminal bonus that they will probably pay out.

It's included in the surrender value.

The days of having to wait until maturity to get the terminal bonus (if any) are long gone.

dunstonh

The days of having to wait until maturity to get the terminal bonus (if any) are long gone.

Not necessarily. Standard Life are known to jump up the terminal bonus on maturity often turning a large shortfall into a large surplus.