Should I Surrender My Endowments??

Bonkjas

I currently have two endowment policies with Friend's provident

• First one for £26,000 matures 29th August 2011. Total of guaranteed amount plus all bonuses £17,009 - surrender value £16,620
• Second one £6,300 matures 5th September 2012. Total of guaranteed amount plus all bonuses £3,889 - surrender value £3,886

I have been contemplating cashing these in for ages now and since I got my 2007 statement with a 0.25% bonus on existing bonues (£17 and £3 respectively) am thinking about surrendering, putting into a high interest savings account and paying my existing monthly premium for both endowments (£57) into the said savings account and leaving for 3 years.

This should give me circa £25k if I get 6% AER

Should I cash in or leave them alone? I know there is going to be a shortfall but on my statements they haven't given any guidance as to what it will be.

I don't actually need these endowments, other than for life assurance, as I make the final payment on my mortgage next month

Regards
BonkJas

EdInvestor

Please post the maturity value projections.

Bonkjas

Projected maturity value in letter dated Sept 2007 for £26,000 endowment at a growth rate of 5.5% (Friend's provident realistic assumption/outlook) gave £21,000

Projected maturity value in letter dated Sept 2007 for £6,300 endowment at a growth rate of 5.5% (Friend's provident realistic assumption/outlook) gave £5,220

So possible £26,220......... but what is the likelihood of achieving that? On the statement I just received it says 'In the near future we expect that any scope to increase payouts will be reflected by changing final rather than regular bonus'. That seems to bear out the piddly 0.25% on existing bonuses

EdInvestor

Sorry, could you also separate out the monthly premiums as there are 2 calculations involved.

Bonkjas

£39.52 for £26,000 one and £11.56 for £6,300 one

EdInvestor

Bonkjas wrote: »

Projected maturity value in letter dated Sept 2007 for £26,000 endowment at a growth rate of 5.5% (Friend's provident realistic assumption/outlook) gave £21,000

If you cashed this one in and put the lump sum in a deposit account also paying in the premiums every month to maturity and achieving a *net* rate of 5%, you would end up with 20,794, almost the same as their projection.

Projected maturity value in letter dated Sept 2007 for £6,300 endowment at a growth rate of 5.5% (Friend's provident realistic assumption/outlook) gave £5,220

Same procedure with the second one, you would get 5,361 a bit more.

Basically there is no premium left in these policies for taking a risk - you get the same for keeping the money in the bank, indeed you may get more .( IMHO FP will strjuggle to make 5.5%, more like 4.5% is likely.)

Suggest you either cash them in and do that, or switch them to a modern tax free wrapper with low charges and decent funds, like a stocks and shares ISA.

Bonkjas

Many thanks for your guidance in this matter - think I will cash em in

Cheers