Cashing in endowments/Savings plans (5 of them)

barneybeagle

I have the following endowments of which I'm contemplating cashing in. Here are the details. Just wondering what peoples thoughts are as the reason being I want to pay off my mortgage early and within the term (3.9 years left). Mortgage rate is approx. 5.5%.

Scottish Widows:
Started: 02/12/1997
Matures: 02/12/2012
£30 per month payments (Payments to date approx. £3,720.00).
On 29th April 08 it was worth £4016.12.

Scottish Life:
Started: 02/12/1997
Matures: 02/12/2012
£25 per month payments (Payments to date approx. £3,100.00).
On 29th April 08 it was worth £2988.72.

Friends Provident:
Started: 06/01/2000
Matures: 06/01/2010
£35 per month payments (payments to date approx. £3,465.00).
On 29th April 08 it was worth £3215.00.

Equitable Life:
Started: 01/11/1997
Matures: 01/11/2017
£15 per month payments (Payments to date approx. £2,040.00).
On 29th April 08 it was worth £1871.00.
To cash this in would involve a 5% Market Reduction Fee or whatever its name is.

Equitable Life:
Started: 22/07/1999
Matures: 22/07/2014
£10 per month payments (payments to date approx. £1,050.00).
Not sure how much this one is worth at the moment but it will involve the 5% reduction fee if it was cashed in.

Any advice would be most appreciated.

Thanks
bb

martinman3

Before you get an answer to your question from someone qualified to do so I would like to ask did you open these policies after consulting an IFA ?

It is a little late now but I believe this highlights the problem that existed at the time with endowments/saving plans being mis-sold, not by misrepresenting their possible future performance but by selling new plans instead of managing the ones you had to gain the salesman more commission.
I say this because these endowments/savings plans have setup costs which are taken in the early years and you could have been better off increasing payments to the plans you already had instead of opening new ones. (except for the Equitable Life policies :rolleyes: )

Capricorn_One

If you do decide to do cash in, please investigate selling instead of surrendering. I just got £1600 more than the surrender value by selling.

As for whether you surrender or sell or keep them, I'm sure someone on here is qualified to give you good advice.

EdInvestor

PLease post the following additional info on the policies:

Guaranteed sum assured
Declared bonuses
Maturity forecasts

You can apply for sale quotes here: https://www.apmm.org

turbobob

Remember though, you can only sell them if they are traditional WP policies. If they are unit linked or unitised with profits policies they are not saleable. Were many companies selling traditional WP policies in late 90's/early 00's?

barneybeagle

Thanks lads for your replies. EdInvestor it will be a couple of weeks before I can get hold of that info. I'll post again then.

Martinman3. I understand what you have said. The IFA was a friend of mine who always gave in my opinion good advice and never tried to extract money out of me. I wanted these savings plans and he told me the ins and outs. It was my decision and I knew all along the scoop. Shame really as I would have liked to claim misselling, but I can't, never mind.

Cheers, will get the relevant info soon.

EdInvestor, always a great help. Much appreciated mate.

Thanks
bb

martinman3

barneybeagle wrote: »

The IFA was a friend of mine who always gave in my opinion good advice and never tried to extract money out of me.

I think you may find that he is still extracting money from you as some savings plans paid a small percentage of the monthly premium for the life of the policy to the "advisor" who sold them. I can't say for certain that is the case for you but it was for me and the "friend" who sold two policies to me which were both never worth more than the total of the premiums paid, and they were surrendered before the dot.com crash !

dunstonh

Endowment renewals tend to be pence. Also, not all endowments are bad. Unit linked endowments have been coming back round in recent years. You may also have had lower monthly payments (as most endowment mortgages were cheaper than repayment).

All that said, setting up multiple endowments, some with only 10-15 years was not a good idea. Looking at the start dates, endowments were already lame ducks by the start of a lot of these and best advice would have been PEP/ISA if investment linked was desirable.

barneybeagle

Here's the info required on each of the savings plans:

Scottish Widows: This one appears to be doing the best out of the lot (unitised WP type policy).

Start 2nd Dec 1997
Matures 2nd December 2012
Unitised With Profit type policy
£30.00 per month into plan from start up.
Cash in value on 1st December 2007 £3,721.46. My payments into the plan upto 1st Dec 2007 is £3,600.00.
On 29th April 08 cash in value was £4016.12.
Life Cover 1st Dec 07 is £4,060.00
Final Bonus is showing £524.57. There was no regular bonus on 1st Dec 07 (0.00%).
No MVR.
Guaranteed Sum Assured: ??? (the only figures I can find are quoted above and below)
4.00% growth: £5,840.00
6.00% growth: £6,340.00
8.00% growth: £6,860.00


Scottish Life

Start: 2nd December 1997
Matures: 2nd December 2012
With Profits policy.
£25.00 per month since start up of plan.
I am still waiting my Dec 2007 statement which 'apparently' is being processed?
On 29th April 2008 the cash in value was £2,988.72. £3,000.00 had been paid in by Dec 2007.
Dec 31st 2006 statement shows:
Sum assured: £3,993.00
New bonus: £10.00
Total Bonuses: £375.00
Basic benefit plus total bonuses declared: £4,368.00
Minimum death benefit: £4,368.00
Cannot find maturity forecasts on these statements.


Friends Provident

Start: 6th Jan 2000
With Profits Policy
Basic Sum assured: £3,638.00
Bonus added: £0.44
Total Bonus added: £176.97
Total of guaranteed amount plus all bonuses: £3,815.41
Bonus rate on existing bonuses: 0.25%
On 29th April 2008 cash in value was £3215.00. I had paid in around 3360.00.
Cannot find any maturity forecasts on these statements.


Standard Life

Start: 22nd Aug 1999
Matures 22nd Aug 2019
With Profits Policy.
£10.00 per month into plan since start up.
On 1st Feb 08 the policy was worth £1,059.60. 9 years payments = £1080.00.
Amount payable on death: £2,180.30
Minimum payable on maturity: £2,178.82
Bonus added: £5.82
Total bonus added: £160.82
Sum assured: £2018.00
3.75% a year £2,700.00
5.50% a year £3,130.00
7.25% a year £3,620.00

Hope this helps and I appreciate as always your assistance and views.

I haven't bothered with the Equitable Life policies as they still have 5% MVR's attached so I think I'll just let them run for what I'm paying a month (£10.00 & £15.00 per month).

Thanks
bb

EdInvestor

barneybeagle wrote: »

Scottish Widows:
4.00% growth: £5,840.00
6.00% growth: £6,340.00
8.00% growth: £6,860.00

With this policy if you cashed it in and used the lump sum to reduce the mortgage, also increasing the monthly mortgage payment by the premium amount, at maturity you would have 6,585.

The SW fund is very unlikely to make more than 5% thus it will probbaly return around 6k but of course this is not guatanteed. There is really no incentive to take a risk with this policy when you are likely to make more with a guaranteed approach..

Sorry I can't help with the others, as no updated surrender values/maturity forecasts.

Rabiddog_2

Why not make your plans paid up? eg just stop paying into them and let them come to maturity as planned.. they can be quite useful savings vehicles to have as they are not counted as "savings" if you ever have to apply for benefit.