Norwich Union endowment: should I sell it on?

col36

Norwich union endowment policy not eligible for reattribution payments.

£74 per month (includes critical illness cover (£287 pa of this on admin and insurance). I can v get cheap insurance from my employer.

surrender value 1/05/08 =£9475

target was £25400
started 1996 (20 year policy)
matures July 2016
£17900 4% (shortfall 7500)
£19400 5% (shortfall 6000)
£21000 6% (shortfall 4300)
MAY receive special payment of £3700. Any possible Terminal bonus is only known at end of term. Nu would not say if I could receive one.
Current interest rate 6.30%. Should be mortgage free in Aug 2011.

I no longer need this policy to pay off my mortgage.

I think it is better to sell the policy now and use the cash generated to save interest on my mortgage. Also £74 per month extra to pay towards mortgage. Is this sensible?
I don’t have any good feelings about NU ever having good returns. They don’t offer any other options other than surrender now or wait the term.

Any advice or comments please.
Im going to obtain a selling quote from a 3rd party in due course.
Many thanks
col

wooders

I've just written the letter today, selling mine.... same boat really
I'm putting £3600 in my isa, £3600 in the wifes isa and the rest paying off the car loan. I agree, NU very negative options although the endow' buyers couldn't better their surrender value....which suprised me

dunstonh

MAY receive special payment of £3700. Any possible Terminal bonus is only known at end of term. Nu would not say if I could receive one.

Final bonus accrues as you go along and the information is available if you ask for it but NU phone staff do sometimes hold back from giving it out. Their online services (if plan is available on there) provide it and you get it when you ask for it in writing as well.

Some of NU's endowments dont include the final bonus acrrued to date in the projections so it is important to know the figure and if it is included as it can completely change the outlook for the policy.

In addition, the projection rates used by NU are lower than standard. The cynic will say that this was done on purpose to allow NU to start the timebar clock ticking on most of their policies. Regardless of the reason though, the projection rates are typically understating the current performance of the CGNU fund. Legacy NU with profit funds are a different matter though.

I don’t have any good feelings about NU ever having good returns.

You may not but that wouldnt be factually correct. Many of NU's with profits plans have been performing in double digits per annum for the last 5 years if you include final bonus. In fact NU are one of only two providers that still offer a viable with profits option for new business and probably only one of small handful for legacy business.

col36

I have just discovered it is a unitised policy and that may be harder to find a buyer.

dunstonh

Thats better news then as the unitised with profits fund tends to perform better than the old conventional with profits. Indeed, the NU plans on my books that have been giving double digit returns are all unitised WP.