Do I keep endowments as savings plan?

Becmar_2

Have three endowments that are no longer linked to my mortage - but we have kept going with a view to them being a savings plan (hoping will need to put 5 kids through University at some point after 2017! Is it possible for someone to let me know if |I'm being stupid to use these as a savings vehicle. Afraid I'm not too clued up on financial matters but trying to resolve that. The three policies are Allied Dunbar (now zurich assurance) Started Aug 92 ,target £26K, premium £41.25PER MONTH, current value £6K and predicted to be paying £14K at 4% and £22K at 8% in 2017 - DEsCRIBED AS A MANANGED UNIT LINKED FUND (NO BONUSESGIVEN). Next is Albany Life (now Canada) started jan95, target 86K, PREMIUM £110 , current value £12K and due to be well short of target by maturity in 2020 even at 8% (£54K) and £34K at 4%. It is described as a unit linked policy . The third is with Friends Prov start dec 97, current value £3K, premium £44K and due to miss target on maturity at 8% (22K I think but details not to hand) described as a with profits unit linked plan.
All have a while to go and I'm not sure how much I need to worry re projected shortfalls - or whether I'd be much better of , with similar risks, using some other saving mechanism? Bottom line is other than for a modest ISA these are the only saving vehicles we have for future needs like colleage fees etc -

Becmar_2

sorry re typo FP is 44 permonth , target £27K

Thefunkygibbons

To be fair, the targets that they give are industry standards and are not an indication of the likely return

All of your policies have a long time to run, and there is no guarantee what they will do. However, in my opinion, they may not be a good savings vehicle as they are quite inflexible.

In many cases, endowments are more valuable if sold (using a specialist broker) rather than surrendered, but I would be surprised if a cash mini ISA and an index tracker ISA would not be a better bet than these policies.

Hopeful one of our IFAs can jump in and help

JimArnold

Remember that endowments have a life assured value as well ie if you die they payout a lump sum.

It's not the best way to insure your life but it's at least worth something and needs to be taken into your calculations

dunstonh

Although they may not be very efficient savings vehicles when compared with other products available today, you do have to remember that most of the charges, if not all, were front loaded. Therefore, if you have paid these charges already, it can make sense to continue the product until maturity. However, fund potential is the key issue here. If the funds have limited growth potential and there is no option to switch, they may not be desirable to continue. However, that would have to offset against cost of getting out.

EdInvestor

Hello Becmar

If you can supply surrender values for the three policies it will be easier to see if they are worth keeping.Ring up and ask.

Becmar_2

Thanks for these tips - one question I have is "Is the surrender Value the same as asking what the current value is? or there or there abouts...?" If so this stands at roughly 3,6 and 12 K for FP, Zurich and Canada...

dunstonh

"Is the surrender Value the same as asking what the current value is?

The current value is without any surrender penalties. So there would be an often sizeable difference.

Becmar_2

OK thanks - I'll make the calls...