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Endowment Bonuses?
Moneybug
Posts: 6 Forumite
I'm 19 years into a 25 year with profits endowment policy and looking to assess the risks attached and the value at maturity including bonuses.
However I am a little confused how the bonuses work, in particular when I rang the company they said that the investment had grown 5% in the last year. However looking at my statement, the annual bonuses say 0% and no mention of a 5% growth.
From my understanding there is a fund which is growing at approx 5%, but 5% of what? my total sum assured? and is this a compounded growth since the start of the policy?
They have sent me a projected figure of what it might reach on maturity at different percentages, the figure they give for 5.5% is approx £20,000, the current guaranteed amount is £10,000 minimum + £5,000 bonuses (£15,000).
It looks like after investing just under £3000 in premiums till maturity it would only have £2000 total bonuses added in real terms . The policy is £30,000 on death.
However I am a little confused how the bonuses work, in particular when I rang the company they said that the investment had grown 5% in the last year. However looking at my statement, the annual bonuses say 0% and no mention of a 5% growth.
From my understanding there is a fund which is growing at approx 5%, but 5% of what? my total sum assured? and is this a compounded growth since the start of the policy?
They have sent me a projected figure of what it might reach on maturity at different percentages, the figure they give for 5.5% is approx £20,000, the current guaranteed amount is £10,000 minimum + £5,000 bonuses (£15,000).
It looks like after investing just under £3000 in premiums till maturity it would only have £2000 total bonuses added in real terms . The policy is £30,000 on death.
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Comments
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Conventional with profits plans have:
Reversionary Bonus (also known nowadays as annual bonus)
Terminal Bonus (also known nowadays as final bonus)
Special Bonus (for one off events)
The annual bonus is guaranteed when added. The terminal bonus is not. Nowadays the bulk of the returns will be in the terminal bonus with very little appearing in the annual bonus.
Some with profits funds are too weak to pay bonuses. Others are not. You have to look at the potential of the with profits fund to work out and make an estimate of its ongoing suitability.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
Post some info about the policy for a view
Provider
Guaranteed sum assured
Declared (reversionary) bonuses
Surrendetr value
Monthly premium
Maturity date
Maturity forecasts
Interest rate payable on mortgageTrying to keep it simple...
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i have one with scottish mutual and havent recieved a bonues for 3 or 4 years now.... and the blooming thin matures in 3 yearssmile --- it makes people wonder what you are up to.... :cool:0
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