surrender endowment or not ?

stevewatersheddings

good morning all,

i currently have an endowment policy with L&G which has 9 years to run until it matures. Its projected maturity values gave me significant shortfalls so i complained. They have upheld my complaint and offered me compensation which would allow me to surrender the policy or give me a calculated lump sum and continue with the policy.

However, i am in a fairly fortunate situation in that the amount of the mortgage that this endowment covers is virtually paid off. The remainder of the mortgage is covered by 2 other wonderful endowment policies which i am currently complaining about !

With this endowment policy i now have a number of options.

1. I could surrender the policy and take the money (£9000) and invest it.
2. I could take the compensation (just over £2000) and continue with the policy paying £85/month. Its projected maturity value at 6% in 10 years is around £22000.
3. I could sell the policy although i dont really know much about this.

I'm not really sure what to do to try to get the best out of the money i've invested in this policy. I think the projected shortfalls have left a bad taste in my mouth and i'm reluctanct to keep giving L&G my money. However, i may have to stomach this because my endowment is so far down the line that it would be foolish to surrender it.

Any help would be greatly appreciated.....

grumpyoldgit_2

Hi

I am far from being any kind of expert so read this with that in mind.

First thing to remember is that you also have the benefit of life insurance with your endowment policy - do you need that security?

I suggest in the first instance that you establsih the "market value" of your policy by approaching one of the trading companies that deal in endowment policy purchases - don't know any personally but they advertise in The Times every Sunday - I guess they are online too so Google may help.

Compare what they offer to your surrender value - I suspect you will be better off disposing of it through a trader than merely surrendering it.

It is also worth discussing you financial affairs with an independent advisor - you can do so free via B&B ( I have used them several time - and for the record I am nothing to do with the company)

You need to weigh up the return avialable to you now and in the future if you sell or leave the policy as is - I think when you get some figures the decision will almost make itself for you.

Hope this helps
Cheers
GoG

EdInvestor

Hello Steve

Post a few figs so we can have a look at it ( them)

Guaranteed sum assured
Attaching bonuses
Surrender value
Monthly premium
Maturity date


You can also see if they are saleable by Googling for "TEP traders". TEP stands for traded endowment policies. Only a few policies can still be sold these days.

Ecky-thump

EdInvestor wrote:

Hello Steve

Post a few figs so we can have a look at it ( them)

Guaranteed sum assured
Attaching bonuses
Surrender value
Monthly premium
Maturity date


You can also see if they are saleable by Googling for "TEP traders". TEP stands for traded endowment policies. Only a few policies can still be sold these days.

All ok if you don't mind giving personal information over an unsecure site! Find a company who offer a secure site first, is my advice, hope this helps...

EdInvestor

Steve

All ok if you don't mind giving personal information over an unsecure site!

If this worries you, send me a PM with the info.

stevewatersheddings

EdInvestor,

Thanks for your help

Guaranteed Sum Assured £25,000
Surrender Value £8369.38
Monthly Premium £84.17
Maturity Date 21st September 2014
Attaching Bonuses ??????

I'm afraid i'm a little lost with the attaching bonuses. What is this ?

I've done a quick calc.
£84 / month is approx £1000 per annum
Remaining 9 years = £9000
On top of existing £8369 surrender value.
This totals £17369.

My endowment provider say at 6% they can make £22,000
My guess is i could invest the money over the 9 year period and make more than the £22000 that the endowment provider estimate.

PS Life Assurance isnt an issue because i have a separate policy...

Any advice would be appreciated....

EdInvestor

Steve:

Do you have a "unitised" WP endowment? That would explain the lack of guaranteed bonuses.

If you surrendered the policy and banked the S/V plus the premiums @4% until maturity you should end up with 22,809 which is more than L&G is forecasting @6%, which gives you some idea of what you're paying for life assurance and in charges.

You could try and get someone to quote a price to buy the policy by Googling for "TEP buyers" (Traded Endowment Policies): If no-one is interested, that's quite a good guide to its likely long-term performance.

I'd have thought you could do better with a different investment strategy these days.

stevewatersheddings

Yes, it is a unitised with profits policy.
I have contacted 2 TEP buyers who have contacted me and said they are not interested in it. One of them mailed me to say that TEP buyers are now generally only interested in traditional with profits policies.
I think given the healthier returns from surrendering the policy, then its time to surrender the endowment and invest the money elsewhere.

Thanks for your help EdInvestor...