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headmelter

Endowment Policy Advice Needed

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Mrs HM and myself still have an endowment (unit linked) which we took out when we bought our first house. We had decided to hold on to it as a 'savings policy', but it is performing very poorly.

We have been paying it for 10 years at £97 a month, its target was for £55k but is way off.

I contacted the company on Friday and was told the value was approx £9600 but had been worth £10300 in mid Jan.

By my calculations I've paid about £12k in and I got £850 four months ago from them after a claim I put in about misselling.The life insurance component is only about a tenner. So I reckon I've lost about £1k.

I suppose my question is should I surrender it tomorrow due to the increasing amount of bearish news. It's my feeling the SM is in for a bumpy ride over the next few months and it's likely to depreciate further or do I hold on to it?

Does anyone have any links to companies that prchase endowments at better rates than their surrender value? I tried two on thisismoney but they did not list the company the endowment is with (Winterthur life).

All opinions greatly appreciated.

(Mods please give the thread a while before moving, I've listed it on the main board in the hope of getting some response.)

Edited by headmelter

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(Mods please give the thread a while before moving, I've listed it on the main board in the hope of getting some response.)

Ditto. I also have a (tiny) endowment (that I no-longer pay into and isn't assigned to any lender) that I'm considering surrendering/selling. I've no "good" investments I'd like to make - I'm entirely unsure how best to proceed.

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Tried an IFA?

Or maybe the reason the investment forum is called by similar name is that people on here are not generally here to discuss the OP subject?

:huh:

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Ditto. I also have a (tiny) endowment (that I no-longer pay into and isn't assigned to any lender) that I'm considering surrendering/selling. I've no "good" investments I'd like to make - I'm entirely unsure how best to proceed.

I'm thinking of buying some of the., dare I say it, yellow shiny stuff, just because I don't have any.

Oh and maybe a few bottles of nice plonk. :rolleyes:

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I'm thinking of buying some of the., dare I say it, yellow shiny stuff, just because I don't have any.

Oh and maybe a few bottles of nice plonk. :rolleyes:

That reminds me of that one liner "drips don't get wet, they just get bigger."

"plonk drinkers......"

:lol::lol:

Sorry only joking.

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Tried an IFA?

Or maybe the reason the investment forum is called by similar name is that people on here are not generally here to discuss the OP subject?

:huh:

Read the last two lines of the post it. If you have an opinion it would be greatly appreciated if you don't why waste your time responding with useless info? :blink:

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Tried an IFA?

Recently - he seemed gold obsessed. I'm not. We didn't get beyond this initial stumbling block.

It also seemed I understood things better than the other FAs I've talked to over the years... which has proved a bad sign.

So far, because mine is a small sum, I've kept it... it has performed badly so far... but it is costing me nothing.

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Recently - he seemed gold obsessed. I'm not. We didn't get beyond this initial stumbling block.

It also seemed I understood things better than the other FAs I've talked to over the years... which has proved a bad sign.

So far, because mine is a small sum, I've kept it... it has performed badly so far... but it is costing me nothing.

Most IFAs aren't that independent and I've rarely had good advice from them hence my post here and intention to make my own decision.

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Most IFAs aren't that independent and I've rarely had good advice from them hence my post here and intention to make my own decision.

:-) Exactly...

From a personal perspective, I'm not looking for advice so much as to solicit ideas and the unconfirmed experiences of others. I will be making my own decision soon - and it never hurts to have an idea of the ideas of those in the same boat.

I don't personally know a single person who has disposed of an endowment...

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Mrs HM and myself still have an endowment (unit trust) which we took out when we bought our first house. We had decided to hold on to it as a 'savings policy', but it is performing very poorly.

We have been paying it for 10 years at £97 a month, its target was for £55k but is way off.

I contacted the company on Friday and was told the value was approx £9600 but had been worth £10300 in mid Jan.

By my calculations I've paid about £12k in and I got £850 four months ago from them after a claim I put in about misselling.The life insurance component is only about a tenner. So I reckon I've lost about £1k.

Trust me it's crap , as you've written you wouldn't even get your money back , you would of got a lot more sticking it into a cash ISA or interest bearing account every month , check out how much Winterthur have made out of you , initial charge plus annual charge maybe a policy charge as well , and for what , to manage what is in effect a poorly performing "closet fund" .

If was in your shoes i would of binend ages ago ;) if you do decide to bin it , your probably find the process could take up to 2 months before you finally get your cash .

Life assurance is very cheap if you shop around .

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All opinions greatly appreciated.

First, you really should see an IFA - get one that charges by the hour though, not commission or you'll just get screwed again.

Second, here's some of the things to consider when talking to the IFA:

When you say you have an 'endowment (unit trust)' do you mean that you have a unit linked endowment policy or are you confusing your terms and do you really have a with profits policy?

If you actually do have a unit linked one, which isn't impossible but is less common, then the only obvious reason for keeping it is that it has a life insurance component which you may not be able to replace if your health has deteriorated since you bought it. Assuming your health hasn't suffered, given that you have made essentially no gains, there's no obvious reason not to cash it in and start putting the money into something more likely to pay off your mortgage (e.g. some lower cost - I bet you're paying huge management fees - unit trusts held within an ISA) and buying some separate life insurance if you need it.

If you have a with profits endowment, then it's all more complex and will depend on what you have in the way of accrued bonuses, what your terminal bonus might be, what the surrender value is and what the potential value of the policy is if sold into the traded endowment market. For this, you really, really, do need professional advice.

Hope that helps.

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If was in your shoes i would of binend ages ago ;) if you do decide to bin it , your probably find the process could take up to 2 months before you finally get your cash .

Is that the cost of surrender, or sale? Not so long ago there were adverts on the radio "Don't surrender your policy - sell it to us instead." I've not heard the adverts recently - but I've not been listening to local radio either.

How does surrender compare with sale in terms of effort required?

Do you really get a better price by selling? Still?

Who are the biggest outfits buying endowments?

Are there any risks I may have overlooked? (For example, how possible/likely is it for me to loose both the policy and the money for which I agree to part with it if I sell rather than surrender?)

Are there any tax implications?

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Trust me it's crap , as you've written you wouldn't even get your money back , you would of got a lot more sticking it into a cash ISA or interest bearing account every month , check out how much Winterthur have made out of you , initial charge plus annual charge maybe a policy charge as well , and for what , to manage what is in effect a poorly performing "closet fund" .

If was in your shoes i would of binend ages ago ;) if you do decide to bin it , your probably find the process could take up to 2 months before you finally get your cash .

Life assurance is very cheap if you shop around .

I intended to bin it about a year ago but they kept me waiting for the poxy £850 compensation.

If it takes about two months to get the cash do I get the amount they quoted on Friday or will they screw me on that as well? :unsure:

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If you have a with profits endowment, then it's all more complex and will depend on what you have in the way of accrued bonuses, what your terminal bonus might be, what the surrender value is and what the potential value of the policy is if sold into the traded endowment market. For this, you really, really, do need professional advice.

While I don't want to comment about others' situations, it is not worthwhile for me to consider professional help - the sums I'm talking about are too small to warrant paying the cost of talking to an independent expert.

My endowment policy is 'bunce' - it isn't needed to repay any debts; it was considered an "insurance cost" at the time... but - today - I don't see why I shouldn't make use of the value it actually has.

I'll be disposing myself. I'd not loose any sleep over this small sum - but, for the same reason that I don't want to be mugged for the cash in my wallet - I prefer to be as informed as possible before I jump here.

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If it takes about two months to get the cash do I get the amount they quoted on Friday or will they screw me on that as well? :unsure:

*Bloody good question*

Anecdotes, anyone?

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First, you really should see an IFA - get one that charges by the hour though, not commission or you'll just get screwed again.

Second, here's some of the things to consider when talking to the IFA:

When you say you have an 'endowment (unit trust)' do you mean that you have a unit linked endowment policy or are you confusing your terms and do you really have a with profits policy?

If you actually do have a unit linked one, which isn't impossible but is less common, then the only obvious reason for keeping it is that it has a life insurance component which you may not be able to replace if your health has deteriorated since you bought it. Assuming your health hasn't suffered, given that you have made essentially no gains, there's no obvious reason not to cash it in and start putting the money into something more likely to pay off your mortgage (e.g. some lower cost - I bet you're paying huge management fees - unit trusts held within an ISA) and buying some separate life insurance if you need it.

If you have a with profits endowment, then it's all more complex and will depend on what you have in the way of accrued bonuses, what your terminal bonus might be, what the surrender value is and what the potential value of the policy is if sold into the traded endowment market. For this, you really, really, do need professional advice.

Hope that helps.

Thanks.

It's definately unit linked. Yearly statement outlines the total number of units and states it is invested in mixed funds. I would imagine you are right and I am paying excessive management fees.

It's no longer needed to pay off the mortgage so I had kept it as a 'savings policy' as I had been used to paying it by DD.

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I intended to bin it about a year ago but they kept me waiting for the poxy £850 compensation.

If it takes about two months to get the cash do I get the amount they quoted on Friday or will they screw me on that as well? :unsure:

No they will send you forms to sign and send back , that can take a week or two then they sellit , pot luck what the unit price is on the day .

Edited by grey shark

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Thanks.

It's definately unit linked. Yearly statement outlines the total number of units and states it is invested in mixed funds. I would imagine you are right and I am paying excessive management fees.

It's no longer needed to pay off the mortgage so I had kept it as a 'savings policy' as I had been used to paying it by DD.

Right, you should almost certainly dump it then. If you do that now, you can split it between you and the Mrs and move all of it into an ISA. Use one of the cheap no-advice online services like Hargreaves Lansdown and you'll pay vastly less fees and have the ability to move the money between funds, shares, ETFs etc very easily.

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First, you really should see an IFA

Honestly i wouldn't bother seeing a IFA , what can he tell you ?

He will have no idea where markets are heading , we're talking less than 10k here why pay some one maybe £200+ for something you can work out yourself .

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All opinions greatly appreciated.

Almost irrelevant which company if unit linked (not unit trust). Also irrelevant what it was valued at. Only relevance is what it's invested in - which you haven't said...

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Mixed fund - you could always stop paying into it and instead pay into an ISA and a quality fund. Depends on ongoing charges - not the ones you've already paid.

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Honestly i wouldn't bother seeing a IFA , what can he tell you ?

He will have no idea where markets are heading , we're talking less than 10k here why pay some one maybe £200+ for something you can work out yourself .

You're possibly looking at this as someone who spends a lot of time looking at financial stuff and, for you or me, you're quite right, don't bother with an IFA. But, for someone who doesn't have the time and the inclination to do that, a IFA paid by the hour (as opposed to some slimy commission shark) can easily save someone their fees. E.g. making sure that someone who puts money into an index tracker of some sort puts it into the one that charges the lowest fees (ignoring the issues of tracking error for a minute) and does it through a broker that refunds all the initial commission will save them the 200 in less than a year. 200 is a bit pricey btw, I know plenty outside of London who charge more like 50.

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Right, you should almost certainly dump it then. If you do that now, you can split it between you and the Mrs and move all of it into an ISA. Use one of the cheap no-advice online services like Hargreaves Lansdown and you'll pay vastly less fees and have the ability to move the money between funds, shares, ETFs etc very easily.

Agree , Hargreaves Lansdowne are excellent , no hassle , been with them over 10 years , no regerts , vast choice of funds at tiny commisions.

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If you are able to use the endowment cash PLUS SAVINGS to pay off your mortgage capital in full, then it's worth cashing it in - because you need to add in all those monthly insurance premiums and mortgage interest payments you won't have to pay over the coming years.

That's what I did.

If you aren't in a position to become mortgage free, then I can't advise - you need to speak to an expert.

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You're possibly looking at this as someone who spends a lot of time looking at financial stuff and, for you or me, you're quite right, don't bother with an IFA. But, for someone who doesn't have the time and the inclination to do that, a IFA paid by the hour (as opposed to some slimy commission shark) can easily save someone their fees. E.g. making sure that someone who puts money into an index tracker of some sort puts it into the one that charges the lowest fees (ignoring the issues of tracking error for a minute) and does it through a broker that refunds all the initial commission will save them the 200 in less than a year. 200 is a bit pricey btw, I know plenty outside of London who charge more like 50.

I think he would be lucky to get a IFA for 50 , there see 10k and will just automatically think about getting 1-2% out of him or tuck him up with some other "product" .

Agree though with Hargreaves though , i get the feeling 10k ain't much to the OP so he could cash the endowment in , and whilst he's waiting for the cheque he could be researching and deciding what funds to invest in with Hargreaves , or just hold it in cash with them until he decides earning a reasonable amount of interest , he could even wrap most of it in 2 equity ISA's .

Edited by grey shark

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