Anyone with a 25 year endowment which matured recently ?

BirnamBear · 5 April 2012 at 8:53AM

Just curious as I have one with Scottish Widows which matures a year from now which was for 40k.

Remember 24 years ago the RBS telling me that I would double my money !! Oh to be so young and naive again

Guessing I will get 25/26ish k back.

kipperkendall · 5 April 2012 at 4:41PM

I have one maturing next year and then one in 2014 with Aviva. Actually, once I talked to them and found out about the projections once the final bonus was added (potentially an extra 32% of the current projected value based on todays values), things look pretty good.

Have you talked to them to get a similar projection and do you also have a Mortgage Endowment Promise (MEP) due?? Look on this site for more info.

Definitely worth calling them I think - made my weekend!!

maninthestreet · 5 April 2012 at 10:51PM

I've got an FP with profits endowment - anyone have one that has matured this year?

BillTrac · 5 April 2012 at 11:33PM

In 1987 I was given the old 'pay your mortgage off and get a £20k bonus on top' bull.

When I moved home I was persuaded to move from a repayment mortgage to an endowment. 8 years ago I was informed of the shortfall. Rather than having my 24k mortgage covered with a nice £20K bonus I was told I could expect £13k with no bonus. I moved to a repayment on a fixed payment.

It paid out last month-£14570.

Luckily because I moved onto a repayment the mortgage is clear and I have a nice holiday fund.

Just read that back to myself...£24k for a 3-bedroom house in the south. Happy days.
Still want to strangle the so-called financial advisor who misled me!

oscarward · 6 April 2012 at 8:01AM

I had 3 which matured over the last 2 years. An Irish Life taken out in 1979 for £10 a month paid out £13K. There was no projection so it just ran for 25 years. It was a funny one where I paid £10 but £12 was actually credited because of something to do with a tax break.

The other 2 were Standard Life 18 year ones designed to pay off a 60k mortgage. 1 for 45k and one for 10k.

They actually paid £36 and £6k.

As we had overpaid they just covered the outstanding amount with a little bit left over for fun.

I've got another fund similar to the Irish Life (10/12 paid) taken out in 1979 which is now worth 8.9k but that is dependant on the stock market fund price.

COLOURBOUNCE · 6 April 2012 at 8:38AM

I think there will be some interesting tales coming through the next couple of years. I've no idea how the payouts get calculated but policies of same premiums with the same provider taken in same years or even months, get differing payouts. All I hear is ' it depends on how their investments performed' like they put funds in differing areas, you get lucky ,or not ?

quitecontrarymary · 6 April 2012 at 8:48AM

I took out an endowment policy to cover my mortgage with Northern Rock in 1983 for £19850. The policy was held with Norwich Union and if I remember correctly I paid £28.79 per month. On Maturity last year the policy fell short by approx £760, which wasnt too bad after all the horror stories we listened to in the years leading up to the maturity of the policy. It did however fall short of the promise given to us on commencement to the policy. Double your money etc. Financial experts ..... Ha

jamesmorgan · 6 April 2012 at 9:38AM

Last month my endowment with Guardian matured for £44,000. It was designed to pay off £30,000 so made £14,000 profit. Taking off life insurance payments the policy grew at an annual rate of 7.1%. It was cheaper than a repayment mortgage + life insurance at the time I took it out and has delivered a profit, so met (exceeded?) all my expectations.

That said, I have a Standard Life endowment due to mature in a couple of years that is likely to have a shortfall. It's not very easy to calculate by how much as it depends on various items such as a terminal bonus and an endowment promise that are both highly discretionary. I suspect the shortfall will be about £10K on a £36K mortgage. The annual rate of return for that policy is likely to be 5.0%. The lower return is partially due to the fact is started 2 years later and missed out on some big growth years in the 1980's, but also that SL got spooked by stock market falls since 2000 and moved most of the funds into gilts/bonds.

The big difference between the two policies is that the SL was a low cost plan. This means that payments were lower but that the plan required at least 7% growth to break even, whereas the Guardian policy had higher monthly payments but only required 4.4% annual growth rate. I recognised the additional risk with the SL policy when I took it out so had made other investments to cover this so the shortfall is not a particular issue.

Overall, I think the endowment policies have done what they set out to do. Investment returns have been lower over the past 25 years than projected, but you can't blame the endowment companies for that. Their main issue has been lack of transparency and relatively high charges. Also, the push to have much lower payments than a standard repayment mortgage led some companies to take too large a risk with investment return assumptions. Not all customers fully understood this risk.

dunstonh · 6 April 2012 at 12:14PM

quitecontrarymary wrote: »

I took out an endowment policy to cover my mortgage with Northern Rock in 1983 for £19850. The policy was held with Norwich Union and if I remember correctly I paid £28.79 per month. On Maturity last year the policy fell short by approx £760, which wasnt too bad after all the horror stories we listened to in the years leading up to the maturity of the policy. It did however fall short of the promise given to us on commencement to the policy. Double your money etc. Financial experts ..... Ha

At the time your policy was sold, plans that were maturing then would have paid upto 4 times more than their target. Part of the problem was that for generations, endowments had paid big surpluses without failure. Complacency set in.

The move to a low inflation economy and the lack of any real negative periods on the markets in the 90s followed by two "once in a generation" sized drops within the space of 10 years just were not thought of by the sellers of these in the 80s. They were not experts either. They were insurance agents.

In your case you did benefit from paying less over the term than a repayment mortgage and ended up financially better off. So, in that respect, taking out the endowment turned out to be the best thing.

It is easy to look back with hindsight and see the problems and where things went wrong but if this site had existed in 1983 then it would have an endowments best buy section. The media were telling people to buy endowments rather than repayment and Which/Consumer Association were telling people to buy endowments and had best buys (which with hindsight were not best buys).

BirnamBear · 6 April 2012 at 1:12PM

Original poster back on-Received my annual doom and gloom update letter today from Scottish Widows.They say to expect 27.5k on current projections.
Can any experts on here tell me if that figure would include or exclude the terminal bonus ?

COLOURBOUNCE · 6 April 2012 at 9:59PM

That's exactly the answer I was looking for from Clerical Medical. Very vague, sort of quoted a figure, mine is up in October. The figure I eventually gleened, they could not say if it included a final bonus or not, but that was the rough amount to expect !! I've no idea anymore.

Anyone with a 25 year endowment which matured recently ?

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