I've decided to cash in my 7 year old endowment policy and change to a capital repayment mortgage. I have been offered a reasonable surrender value from CGU but I am told that you can sell these policies for much more than the surrender value.

I've tried Robin Lloyd Associates (you may have heard their c**p advert on the radio) but they could not better CGU's surrender value.

Any suggestions? (4 new SO-2's may depend on this).

D.

[This message has been edited by DJB (edited 12 December 2000).]

 

D,
Try the financial mail on sunday there are loads of companys advertising for them in there,you can only sell with profits policies for some reason.I sold one a few years back and a mate sold one recently,both were surendered as the price could not be beaten.
Dont listen to the to$$ers who say its the worst thing you can do,i doubled the value of mine in 3 years after surrendering it,you'll be lucky to clear 5% a year after costs leaving it where it is.
cheers Paul

 

Key factor is how long it has to run. If it is coming up to maturity it is worth a lot more. As Paul says try the Sunday papers. If it is 7 years old it will have been paying loads of commission to the salesmen and I doubt if it will be in, or much in, profit yet.

You may as well get rid, not an effective way of investing money today (not a criticism, i've also had loads of endowments in the past).

 

IF you can afford to keep it going, do so.

 

My CGU endowment policy broke even after only 3 yrs, i.e. premiums paid <= surrender value.

DJB, email me offline with the details and i might be interested.

Cheers

Sunil

 

One of the key features of an endowment is the terminal bonus, paid upon maturity. Surrendering a policy before maturity means you lose out on this bonus, which can be fairly substantial.

If you've received a letter off your endowment provider because the policy is linked to the mortgage (as required by the ABI) this should give a projection to the maturity value of the policy at 4%/6%/8%. The letter would contain a number of options if your endowment is off track to paying a mortgage, including converting just part of your mortgage to repayment, and keeping the policy in force.

The rule of thumb is: the first 2-3 years of an endowment pays the set-up costs (including the salesman's fat wad) so it is only after this time that it grows in value. Personally, I would never surrender an endowment unless in dire circumstances.

Get all the information you can before making a decision - see an independant financial adviser - only then can you make a balanced judgement. Details of IFAs can be provided on the IFA Consumer Hotline on (0117)9711177.

Andrew

 

Thanks for all your replies.
It is an endowment policy which is linked to a mortgage and it will not mature until 2018. I've decided to change to capital repayment so that when I move house in a few years time, I will have more capital to put towards a new property.

Its got to go so if I cannot get better than the surrender value (which is about two thirds of amount paid so far), I will surrender it to CGU anyway.

D.

 

D,

This may be of interest. I have never used them but they may provide an alternative.

 

DJB,

I agree with Neil, don't surrender it if at all possible. You'll get next to nothing for it after 7 years but, if you keep it going for the remaining 18 (and the premiums become a smaller proportion of your monthly outgoings as the years go on), you'll be in for a cash windfall when it matures (and it also gives you the option of taking out another interest-only mortgage in the future without having to fund another endowment, with all its up-front commission costs). You say it's linked to your endowment mortgage, but I doubt if it is. You've been using it as a means to pay off the capital element of the endowment mortgage at the end of its term. Don't cash it in if you can find a way of affording to keep it.

 

We did the same as you a few years back. We sold to a company called Policy + I think they have a web site. The Insurance Co surrender value was less than we'd paid in over six years. Policy + gave us what we'd paid in plus what we'd have probably gained if it had been in a Building Society at the time.

They have to have a solicitor check it has no existing charges over it and all that stuff, a bit like when you buy a house, but in the end we got what we felt was a fair deal.

We kept another endowment running as the return would have been rubbish.

 

Thanks again everyone.

I'll try PolicyPlus - in fact I've already tried to submit the on-line quotation without success. I try again tomorrow or phone them.

D.

ps sorry about the thumbs down sign at the top, must have clicked it by mistake.

[This message has been edited by DJB (edited 14 December 2000).]