Endowments-Should I cash in?

QTC

Hello,

I'd appreciate some advice on 3 endowment policies I have. I no longer own a house, and am not interested in the life assurance. I've kept them going simply as a means of saving, but returns are not looking to good. The policies are:

Sun Alliance (now Phoenix) started 6/8/1987, matures 6/7/2027,
Basic sum assured £2098.00 Premium £7.36 per month
Bonus earned to 31.12.06 £1198.02

Sun Alliance(now Phoenix) started 23/11/1989, matures 23/10/2014,
Basic sum assured £3832.00 Premium £15.36 per month
Bonus earned to 31.12.2006 £1596.70

For both policies above, rates of annual bonus declared at 31.12.2006
0.10% of the amount on which basic bonus is calculated
0.10% of bonus earned to 31.12.2005

Standard Life started 18/1/1991, matures 18/1/2016
Sum assured £1300.00 Premium £5.84 per month
Total current value 1.2.2008 £1487.25
made up of £1314.10 current value, plus £173.15 final bonus
Minimum amount payable on maturity £1938.46
made up of £1300.00 sum assured, plus £638.46 bonus added.

For the above policy, bonus rates since 1/2/08 are
0.5% on bonuses already added
0.25% on sum assured

That's the best information I have at the moment - I'm waiting for Phoenix to get back to me on surrender values. I've enquired online about selling these policies, but I've had no interest.

Thanks for any help

EdInvestor

As well as surrender values please also post the maturity forecasts.

tight-git

hi all, im on the same boat as QTC, sold my 1st investment house 5yrs ago, kept the endowment but since then, i have had 11k compensation by KEYPLAN ,think they took 3k on top of what i had! - but i didnt lift a finger :rotfl:

anyway, just called aap.co.uk trying to cash in this standard life policy with a value of 13.3k as on 1/2/08 . started in 1993. will try to publish these here to help others. but would like any other recommendation of other co for better return or other ideas.

many thanks :beer:

QTC

EdInvestor wrote: »

As well as surrender values please also post the maturity forecasts.

EdInvestor,

Thanks for replying. The latest letters I can find from Phoenix, dated the end of 2006, show:

start date: 6/8/87; matures;6/8/2027; premiun £7.36; Target £16390
Projected final amounts £4160 @ 3.25% pa, £4690 @ 4% pa, £5570 @ 5% pa.

start date 23/11/89; matures 23/11/2014; premium £15.36; Target £11610
Projected final amounts £6410 @ 3.25%, £6710 @ 4%, £7170 @ 5%.

Sorry I can't lay my hands on the most recent items - assuming I did actually receive anything..

The Standard Life forecasts are dated April 2008, and show:

£2300 @ 3.75% pa, £2590 @ 5.5%, £2920 @ 7.25%, with a target of £4000.

The latest pack from Phoenix contained a leaflet which included a section entitled "Investment Markets". One bullet point stated "Our commercial property investments performed well, returning about 18% in 2005." As far as I understand it, that bubble has recently burst, so I'm wondering how this will affect these policies.

If this is important...A table in this booklet shows the proportions of shares and property held for these policies at 31/12/05. The first policy is probably 17% shares, 18% property ; the second policy is 15% shares 15% property.

Thanks for your help. If cashing in was the best option, I was thinking of putting the money into ISAs .

EdInvestor

You'll need to phone them up to get updated figures.

QTC

Hello,

I've updated the figures based on latest information from the plan providers. To recap, I'd appreciate some advice on 3 endowment policies I have. I no longer own a house, and am not interested in the life assurance. I've kept them going simply as a means of saving, but returns are not looking to good. The policies are:

Sun Alliance (now Phoenix) started 6/8/1987, matures 6/7/2027,
Basic sum assured £2098.00 Premium £7.36 per month
Bonus earned to 31.12.06 £1198.02
Forecast at maturity (2/6/08): £4170 @ 3.5%, £5520 @ 5.25%
Surrender value: £1818 Premiums paid in to date: £1832 :mad:

Sun Alliance(now Phoenix) started 23/11/1989, matures 23/10/2014,
Basic sum assured £3832.00 Premium £15.36 per month
Bonus earned to 31.12.2006 £1596.70
Forecast at maturity (2/6/08): £6280 @ 3.5%, £6920 @ 5.25%
Surrender value: £4153 Premiums paid in to date: £3425

For both policies above, rates of annual bonus declared at 31.12.2006
0.10% of the amount on which basic bonus is calculated
0.10% of bonus earned to 31.12.2005

Standard Life started 18/1/1991, matures 18/1/2016
Sum assured £1300.00 Premium £5.84 per month
Forecast at maturity (2/6/08): £2300 @ 3.75%, £2590 @ 5.5% £2920 @ 7.25%
Surrender value: £1524 Premiums paid in to date: £1150

For the above policy, bonus rates since 1/2/08 are
0.5% on bonuses already added
0.25% on sum assured

You might have guessed that there has been no interest with endowment policy traders I've approached. The Phoenix policies appear to be going backwards, as the forecasts today are less than those given in 2006. If I cashed these in, put the lump sum in a savings account paying around 5% and added the future premiums, my rough calculations tell me that I will do just as well. The question is, are these policies likely to improve in performance between now and maturity?

Also, as these have been going for over 10 years, I'm assuming that surrendering them would not be a chargeable event...

Thanks in advance for any help, I really appreciate it..

dunstonh

he Phoenix policies appear to be going backwards, as the forecasts today are less than those given in 2006

Is that because the projection rates are different?

The question is, are these policies likely to improve in performance between now and maturity?

Phoenix ones are highly unlikely to improve. I wouldnt even go by the lower projection on these personally. SL tend to be a lot better and have typically been exceeding the 7.25% projection. However, the 15 year term works against it.

What are the current terminal bonuses accrued on the SL plan and what is the full sum assured (you mention only the basic).

QTC

dunstonh wrote: »

Is that because the projection rates are different?

They are different. For the least worse policy in 2006, they projected £7170 assuming 5%. Now, they say £6920 assuming 5.25%...a lower projection, even with a more optimistic growth rate.

dunstonh wrote: »

Phoenix ones are highly unlikely to improve. I wouldnt even go by the lower projection on these personally. SL tend to be a lot better and have typically been exceeding the 7.25% projection. However, the 15 year term works against it.

It's a 25 year term..1/1991 to 1/2016

dunstonh wrote: »

What are the current terminal bonuses accrued on the SL plan and what is the full sum assured (you mention only the basic).

The only sum assured SL mention is that of £1300, with a guaranteed death benefit of £4000. Values from 1 Feb 2008 was £1487.25, made up of £1314.10 current value plus £173.15 final bonus (the surrender value today was £1523.50, but I don't know how this splits between current value and final bonus). Bonus added to the plan at 1/2/08 was£638.46; add this to sum assured of £1300 gives £1938.46 minimum amount payable on maturity.

I hope the figures you want are in there somewhere. Sorry I can't be clearer but, like many people on here, this is not really my field of expertise.

ps. They talk about a mortgage endowment promise, which is estimated to be worth £328-492 on maturity. They do tell you not to rely on it, as it is not guaranteed.

EdInvestor

QTC wrote: »

Sun Alliance (now Phoenix) started 6/8/1987, matures 6/7/2027,
Forecast at maturity (2/6/08): £4170 @ 3.5%, £5520 @ 5.25%

If you cashed this one in and either put it on deposit or invested it at a return of 6%, also paying in the premiums to maturity you would end up with 8,428

Sun Alliance(now Phoenix) started 23/11/1989, matures 23/10/2014,
Forecast at maturity (2/6/08): £6280 @ 3.5%, £6920 @ 5.25%

With this one following the same approach would give you 7187 at maturity.

So I would bin these two.

Standard Life started 18/1/1991, matures 18/1/2016
Forecast at maturity (2/6/08): £2300 @ 3.75%, £2590 @ 5.5% £2920 @ 7.25%

With this one the return would be 3,165, still better than the top projection, so there's no risk premium left basically as the SL fund is unlikely to make more than around 5% long term.So i would consign this one to hostory's dustboin as well and get your self a better quality tax free low charge investment instead.

dunstonh

so there's no risk premium left basically as the SL fund is unlikely to make more than around 5% long term

Although in recent years it has been exceeding 7%. What basis do you have to say it will not make 5% p.a. long term?

QTC

Based on this advice, it looks like i could make at least similar returns on all 3 policies in other ways, but with less risk..thanks for the advice..