Should I surrender my endowment policy?
Discussion
Like many in the '80s, my first house purchase was funded by an endowment mortgage.
My original mortgage was for £35k.
I realised a good while ago that the policy was unlikely to make £35k and am not relying on this investment to pay off my mortgage.
However, I'm now 24years into a 25year term endowment and have just received an annual statement.
The current surrender value is £24.5k
The surrender value at the same time last year was around £28k
There was a thread on this topic a couple of months ago clicky
from which it would appear that I should have surrendered it 12 months ago
The question now is,, do I hold on for another 12months, hoping that things will improve and hold out for any terminal bonuses, or do I cash it in straight away on the grounds that things are bound to get worse?
My original mortgage was for £35k.
I realised a good while ago that the policy was unlikely to make £35k and am not relying on this investment to pay off my mortgage.
However, I'm now 24years into a 25year term endowment and have just received an annual statement.
The current surrender value is £24.5k
The surrender value at the same time last year was around £28k
There was a thread on this topic a couple of months ago clicky
from which it would appear that I should have surrendered it 12 months ago
The question now is,, do I hold on for another 12months, hoping that things will improve and hold out for any terminal bonuses, or do I cash it in straight away on the grounds that things are bound to get worse?
Many questions over your policy are unanswered so to give you a yes no answer would be dangerous. Speak to an IFA www.unbiased.co.uk for a professional and considered opinion.
I had 2 endownment policies that I took out in early and late 1970s. Total premium was £21/month. Both paid out nearly 6 years ago. The policy covering £7K of a mortgage paid out £23K and the other policy for £9K paid out £16K. Over 50% of the payouts were terminal bonuses.
However, a policy for £24k taken out in 1992 proved to be hopeless and I cashed it in 3 years ago. Actually received an extra payment as the policy was considered to be mis-sold. The extra payment was calculated to put me into the same position as if I had taken out a standard repayment mortgage. The calculation was too complex for me to follow fully but it gained me a few extra thousands of pounds.
In your case probably better to cash it in. There are firms that will buy your endownment policy - may offer you slightly more than the cash-in value?
However, a policy for £24k taken out in 1992 proved to be hopeless and I cashed it in 3 years ago. Actually received an extra payment as the policy was considered to be mis-sold. The extra payment was calculated to put me into the same position as if I had taken out a standard repayment mortgage. The calculation was too complex for me to follow fully but it gained me a few extra thousands of pounds.
In your case probably better to cash it in. There are firms that will buy your endownment policy - may offer you slightly more than the cash-in value?
No. you wont benifit from any potential final bonuses.
However, you should have cashed it in 10 years ago. Throwing good money after bad.
I find it hard to believe that people still paid into these, I find it hard to beleive the government didnt tell you how naievly stupid it was to continue paying into this.
I cant think of any explanation as to why someone would still be paying into a scheme 15 years after it was obvious to everyone that they were nothing more than a con, a fraud.
How many financial advisors took Endowment policies in the 90's for their own mortgage needs. Fek all. Thats all you need to know.
So why didnt you cash it in? I dont think you can even claim compensation anymore on these things.....
However, you should have cashed it in 10 years ago. Throwing good money after bad.
I find it hard to believe that people still paid into these, I find it hard to beleive the government didnt tell you how naievly stupid it was to continue paying into this.
I cant think of any explanation as to why someone would still be paying into a scheme 15 years after it was obvious to everyone that they were nothing more than a con, a fraud.
How many financial advisors took Endowment policies in the 90's for their own mortgage needs. Fek all. Thats all you need to know.
So why didnt you cash it in? I dont think you can even claim compensation anymore on these things.....
You"ve missed the boat by 18 months. May as well continue if you only have one year to go.
I cashed my endowments in July 2007. I'd like to be able to say I predicted the collapse of western civilisation but I needed to raise so money so it was dumb luck. Reckon they would have dropped £10,000 between then and now.
I cashed my endowments in July 2007. I'd like to be able to say I predicted the collapse of western civilisation but I needed to raise so money so it was dumb luck. Reckon they would have dropped £10,000 between then and now.
Tony*T3 said:
No. you wont benifit from any potential final bonuses.
However, you should have cashed it in 10 years ago. Throwing good money after bad.
I find it hard to believe that people still paid into these, I find it hard to beleive the government didnt tell you how naievly stupid it was to continue paying into this.
I cant think of any explanation as to why someone would still be paying into a scheme 15 years after it was obvious to everyone that they were nothing more than a con, a fraud.
How many financial advisors took Endowment policies in the 90's for their own mortgage needs. Fek all. Thats all you need to know.
So why didnt you cash it in? I dont think you can even claim compensation anymore on these things.....
Tony, the question is what should I do now, not what should I have done X years ago.However, you should have cashed it in 10 years ago. Throwing good money after bad.
I find it hard to believe that people still paid into these, I find it hard to beleive the government didnt tell you how naievly stupid it was to continue paying into this.
I cant think of any explanation as to why someone would still be paying into a scheme 15 years after it was obvious to everyone that they were nothing more than a con, a fraud.
How many financial advisors took Endowment policies in the 90's for their own mortgage needs. Fek all. Thats all you need to know.
So why didnt you cash it in? I dont think you can even claim compensation anymore on these things.....
The surrender value of the policy, even at this years reduced amount, is far, in excess of the amount
that I have paid in in premiums over the years. So it's hardly 'bad' money.
I've no idea how financial advisors have funded their own home purchases, but some of those same advisors will have invested money in sub prime loan derivatives, Bank shares, Allan Stanford's pyramid scheme, Icelandic Banks, etc etc...
Some you win, some you lose.
I'm not bleating, I'm just asking for opinions as to the best way forward
sparkythecat said:
Tony*T3 said:
No. you wont benifit from any potential final bonuses.
However, you should have cashed it in 10 years ago. Throwing good money after bad.
I find it hard to believe that people still paid into these, I find it hard to beleive the government didnt tell you how naievly stupid it was to continue paying into this.
I cant think of any explanation as to why someone would still be paying into a scheme 15 years after it was obvious to everyone that they were nothing more than a con, a fraud.
How many financial advisors took Endowment policies in the 90's for their own mortgage needs. Fek all. Thats all you need to know.
So why didnt you cash it in? I dont think you can even claim compensation anymore on these things.....
Tony, the question is what should I do now, not what should I have done X years ago.However, you should have cashed it in 10 years ago. Throwing good money after bad.
I find it hard to believe that people still paid into these, I find it hard to beleive the government didnt tell you how naievly stupid it was to continue paying into this.
I cant think of any explanation as to why someone would still be paying into a scheme 15 years after it was obvious to everyone that they were nothing more than a con, a fraud.
How many financial advisors took Endowment policies in the 90's for their own mortgage needs. Fek all. Thats all you need to know.
So why didnt you cash it in? I dont think you can even claim compensation anymore on these things.....
The surrender value of the policy, even at this years reduced amount, is far, in excess of the amount
that I have paid in in premiums over the years. So it's hardly 'bad' money.
I've no idea how financial advisors have funded their own home purchases, but some of those same advisors will have invested money in sub prime loan derivatives, Bank shares, Allan Stanford's pyramid scheme, Icelandic Banks, etc etc...
Some you win, some you lose.
I'm not bleating, I'm just asking for opinions as to the best way forward
Its as fraudlant as it gets in my book. "we got it wrong so now you should pay more"....
One of the watchdog type programmes did a survey around 10-12 years ago of hundreds of 'independant financial advisors'. 99.8% said they wouldnt use an endowment policy for themselves, yet they all still sold them.
Tony*T3 said:
No. you wont benifit from any potential final bonuses.
However, you should have cashed it in 10 years ago. Throwing good money after bad.
I find it hard to believe that people still paid into these, I find it hard to beleive the government didnt tell you how naievly stupid it was to continue paying into this.
I cant think of any explanation as to why someone would still be paying into a scheme 15 years after it was obvious to everyone that they were nothing more than a con, a fraud.
How many financial advisors took Endowment policies in the 90's for their own mortgage needs. Fek all. Thats all you need to know.
So why didnt you cash it in? I dont think you can even claim compensation anymore on these things.....
THe original idea with endowments was a sound one.However, you should have cashed it in 10 years ago. Throwing good money after bad.
I find it hard to believe that people still paid into these, I find it hard to beleive the government didnt tell you how naievly stupid it was to continue paying into this.
I cant think of any explanation as to why someone would still be paying into a scheme 15 years after it was obvious to everyone that they were nothing more than a con, a fraud.
How many financial advisors took Endowment policies in the 90's for their own mortgage needs. Fek all. Thats all you need to know.
So why didnt you cash it in? I dont think you can even claim compensation anymore on these things.....
You took out an endowment that had a value of the amount you wanted to cover. Because of this you never had a situation where any amount paid out was less than that value. (Sum assured).
As others have said, the terminal bonuses are what gave the endowment value i.e. you covered the sum assured, plus you gained from the terminal bonuses and the life cover the endowment gave you.. In addition if you moved house frequently, you also had the option to "fix" the point at which your mortgage was paid off, ie not continually extending the term on your mortgage.
Where it all went wrong was in moving away from the "sum assured" route. The insurance compaies saw the level of terminal bonuses and decided that off the back of that they could reduce the sum assured knowing that the terminal bonuses would make up the shortfall.
As terminal bonuses reduced as a proportion of the sum covered, the shortfalls started to occur. That is why endowments failed, because the insuracne companies wanted to offer "low cost" endowments. Had thing stuck as they were via the "sum assured" route, the wheels would have stayed on the wagon.
As of 18 months ago the surrender values of endowments started to increase as the insurance companies could see light a the end of the tunnel regarding the mis-selling - they were reducing terminal bonuses because of the compensation being paid out.
To the OP, I'm not sure what the current situation is on surrender values, but with an endowment being within 12 months of completion, I would hold tight as the terminal bonuses will make up a large proportion of the final pay out, if you surrender now, you're valuation may not take full account of this.
(PS I'm not an IFA!)
Update
As I couldn't find the original policy document, I've just spoken to the provider, for an update on the current terminal bonus payments for this policy.
First the bad news - there are no terminal bonuses as such, payable on this policy.
Next the VERY GOOD NEWS. When I took out this policy, there was an option to guarantee that the sum assured would be paid at the end of the 25 year term, presumably by paying a slightly higher premium. I apparently opted for this option, which I'd forgotten about.
So, if I keep up the premium payments until the end of term, I am guaranteed to be paid the full £35k
As I couldn't find the original policy document, I've just spoken to the provider, for an update on the current terminal bonus payments for this policy.
First the bad news - there are no terminal bonuses as such, payable on this policy.
Next the VERY GOOD NEWS. When I took out this policy, there was an option to guarantee that the sum assured would be paid at the end of the 25 year term, presumably by paying a slightly higher premium. I apparently opted for this option, which I'd forgotten about.
So, if I keep up the premium payments until the end of term, I am guaranteed to be paid the full £35k
sparkythecat said:
Update
As I couldn't find the original policy document, I've just spoken to the provider, for an update on the current terminal bonus payments for this policy.
First the bad news - there are no terminal bonuses as such, payable on this policy.
Next the VERY GOOD NEWS. When I took out this policy, there was an option to guarantee that the sum assured would be paid at the end of the 25 year term, presumably by paying a slightly higher premium. I apparently opted for this option, which I'd forgotten about.
So, if I keep up the premium payments until the end of term, I am guaranteed to be paid the full £35k
That's your temninal bonus then - sorted!As I couldn't find the original policy document, I've just spoken to the provider, for an update on the current terminal bonus payments for this policy.
First the bad news - there are no terminal bonuses as such, payable on this policy.
Next the VERY GOOD NEWS. When I took out this policy, there was an option to guarantee that the sum assured would be paid at the end of the 25 year term, presumably by paying a slightly higher premium. I apparently opted for this option, which I'd forgotten about.
So, if I keep up the premium payments until the end of term, I am guaranteed to be paid the full £35k
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