Norwich Union with profits endowment free advice please

wooders

I have a with profits endowment policy taken out 12 years ago to cover a mortgage of £58000, I pay £89 monthly. Norwich Union the provider say that there will be a shortfall but will gurantee 6% growth meaning a likley payout of around £40k ish in 13 years time. The surrender value of the policy is currently £14k. This policy is now purely a savings policy as my house is mortgaged with a repayment (owing £97k over 17years). Oh I do have life cover with it too

Advice please
:money:
Should I surrender
Should I use it towards paying my mortgage off
Should I put the money elsewhere
Should I keep it

daveyjp

We are in the same boat - endowment which is now purely for savings as we moved to a repayment mortgage. I am keeping it as I am eligible for an orphan funds payout later this year if it is all agreed - just had the first letter about a 3% bonus to be paid. Ours only has 9 years to go and with a daughter to possibly get through Uni it will be useful for that if nothing else.

EdInvestor

Post some info for a view

Guaranteede sum assured
Declared bonuses
Surrender value
Monthly premium
Maturity date
Maturity forecasts
Interest rate payable on mortgage

wooders

As above

Sum assured - £58000
no declared bonus as this is a unitised policy
Surrender Value - £14881.45
Monthly premium - £96.86
Maturity date - 28/05/2021
Maturity forecast - at 5.2% at the moment £40000
Interest rate - with profits 2% guaranteed withprofits 2.5%
Fund value - £13008 plus bonus £1873

hope you can help......should I stay or should I go

EdInvestor

wooders wrote: »

Maturity forecast - at 5.2% at the moment £40000

Could you please posts the three maturity forecast amounts

Interest rate - with profits 2% guaranteed withprofits 2.5%

I meant the interest rate you pay on the mortgage.(The reason for this is that often the best way of deploying the money from an endowment is to use it to reduce the mortgage.)

wooders

The forecasts I have are;
4% £37,700 shortfall of £20,300
5% £42,100 shortfall of £15,900
6% £47,000 shortfall of £11,000

growth at preseny is 5.2%. This policy is purely a savings thing at the moment. My normal house mortgage is a repayment that I'm quite happy with at the moment

hope this is the info you needed

Wooders

martinman3

wooders wrote: »

This policy is purely a savings thing at the moment. My normal house mortgage is a repayment that I'm quite happy with at the moment

wooders wrote: »

Should I surrender
Should I use it towards paying my mortgage off
Should I put the money elsewhere
Should I keep it

Why have you now dismissed the idea of paying off part of your mortgage ?

You should only surrender/trade your endowment policy if you can get a better return from the proceeds elsewhere and redeeming part of your mortgage would probably do that and EdInvestor will need your mortgage rate to do the calculation. If there is a penalty for a part redemption you should tell him what it is as it obviously affects the calculation.

dunstonh

NU reduced the growth rates on the illustrations to put as many people as possible into a shortfall position to start the time bar clocking ticking. So you do have to consider that the projections given may be understating the likely returns.

growth at preseny is 5.2%.

Does that include the special bonuses of 3% p.a. being paid each year for the next 3 years on top of the normal bonuses? Does it also include the final bonus?
5.2% seems a bit low if you include those based on the NU plans I have seen. Which With profits fund is it in? (i.e. CGNU, NU, Provident Mutual or one of the others).

wooders

Cheers dunston, I didn't dismiss the idea but....

Lots of Qs there,
I do have a penalty, its 3k until the fixed rate is over in 4 years. The rate is 5.25% for this period and the full balance is 91k over the next 17 years.
All the bonuses are as shown and the final bonus. Apparently the previous year was 9% growth but last year it fell to 5.2%. As far as I know its the NU fund
Hope this helps. ( I also have a 13k loan that I was thinking of paying off with this dosh thats at 6.44% for the next 4.5years, a good idea??)

cheers again , wooders