Should I surrender endowment?

MG_Jo

Hi,
I have a endowment policy with Legal & General. This is not held against a property and I only kept it going originally as a form of savings As it is under performing I wonder whether surrendering it and putting the money plus the monthly premium in a high interest savings account might be better.

Total sum assured - £47,309
Monthly premium - £76.75
Surrender Value (as at 8/04) - £12,890
Current fund value (as at 8/04) - £12,107
Maturity date - 15/05/2020

L&G projections as at Dec 2006
4% growth - projected final amount - £31,600
6% growth - proj final amount - £39,200
8% growth - proj final amount - £48,600

I think that surrendering might be the best way to go if I put the money in a long term saving account with an interest rate of 6% or more.

Any comments or help gratefully received.

Jo

dunstonh

I think that surrendering might be the best way to go if I put the money in a long term saving account with an interest rate of 6% or more.

Looking at your figures, it has been performing above 6% net and that includes the cost of life cover. Yet you are considering 6% gross with no life cover.

Most L&G endowments were set up with around 7% as the target growth rate so this one is not far from being on track. You also lose 6% due to surrender. So, it will take you over 12 months to recover that.

MG_Jo

Thanks for the advice, bit of a novice with financial stuff

dunstonh

Just to clarify, that doesnt mean you should keep it going forward. Just that it is not bad like you think it is. It looks like it has outperformed savings accounts so far.

How is currently invested, with profits or unit linked? if unit linked what funds is it in?