Endowments (again)
Discussion
Rules for a policy to remain 'qualifying', ie free from tax:
a) The premiums must be payable for ten years or 75% of the term whichever is the shorter. For example a ten year endowment plan will qualify after seven and a half years. b) The premiums must be paid regularly on an annual or more frequent basis such as monthly. c) The sum assured must be at least 75% of the total premiums payable over the life of the policy.
If the policy is with-profits, then any terminal bonus on maturity would be lost if you surrender it early.
Another option may be to look at making the policy 'paid-up'. You will need to contact your provider for their rules on this, but generally if you stop paying the premiums, after 13 months it becomes 'paid-up'. At this point the amount you will receive at maturity is fixed (usually more than the surrender value), and the life cover element will reduce accordingly. Could be an option worth looking at if you have a shortfall on the targeted maturity value and the policy is still being used as a repayment vehicle for a mortgage. You could then convert the difference between the amount of the mortgage and the paid-up value of the policy to a repayment mortgage.
Not giving advice, merely stating there may be other options open to you.
Mrs Seb
a) The premiums must be payable for ten years or 75% of the term whichever is the shorter. For example a ten year endowment plan will qualify after seven and a half years. b) The premiums must be paid regularly on an annual or more frequent basis such as monthly. c) The sum assured must be at least 75% of the total premiums payable over the life of the policy.
If the policy is with-profits, then any terminal bonus on maturity would be lost if you surrender it early.
Another option may be to look at making the policy 'paid-up'. You will need to contact your provider for their rules on this, but generally if you stop paying the premiums, after 13 months it becomes 'paid-up'. At this point the amount you will receive at maturity is fixed (usually more than the surrender value), and the life cover element will reduce accordingly. Could be an option worth looking at if you have a shortfall on the targeted maturity value and the policy is still being used as a repayment vehicle for a mortgage. You could then convert the difference between the amount of the mortgage and the paid-up value of the policy to a repayment mortgage.
Not giving advice, merely stating there may be other options open to you.
Mrs Seb
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