Worth keeping my Endowment?


A

Andy Fell

Hi, I'd like to seek the opinion of you guys.

I have had a Countrywide Assured Endowment policy running for the last
8 years. Yes Yes.. another one for the statistics!

I am now disconnecting the endowment from my mortage and going over to
a repayment flexible mortage type at 5.7% interest (one account
flexible) over 16years.

The endowment plan has this year grown at 6%, but over the last 5
years it has been utter crap at around -3%. It is now worth ~3.5k
(been putting in 55GBP per month for 8 years). I understand all of
the issues with management charges consuming a lot of the money in the
early years.

If you were my position would you:

(a) Surrender/sell it at a loss of just under 2k, and then dump this
into the flexible mortgage saving 5.7% interest on the sum. And then
put the 55GBP I would have paid into the endowment, into the mortgage
for the rest of the term.

(b) Keep it as a long term saving and hope it retains 6% average (is
this likely?) and make a reasonable sum at the end. Now am I just
hoping too much?

Also, what company would be interested in buying this policy? On some
literature I have been sent (by Countrywide of course!) it says that
it's unlikely to sell because it is unit linked. Now is this BS
because they want me to keep paying in, or is this true?

Would be great to hear anyones opnions.
cheers
Andy
PS. dont email the above address its a spam bucket, I dont look at it
 
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M

Martin

Andy Fell said:
Hi, I'd like to seek the opinion of you guys.

I have had a Countrywide Assured Endowment policy running for the last
8 years. Yes Yes.. another one for the statistics!

I am now disconnecting the endowment from my mortage and going over to
a repayment flexible mortage type at 5.7% interest (one account
flexible) over 16years.

The endowment plan has this year grown at 6%, but over the last 5
years it has been utter crap at around -3%. It is now worth ~3.5k
(been putting in 55GBP per month for 8 years). I understand all of
the issues with management charges consuming a lot of the money in the
early years.

If you were my position would you:

(a) Surrender/sell it at a loss of just under 2k, and then dump this
into the flexible mortgage saving 5.7% interest on the sum. And then
put the 55GBP I would have paid into the endowment, into the mortgage
for the rest of the term.

(b) Keep it as a long term saving and hope it retains 6% average (is
this likely?) and make a reasonable sum at the end. Now am I just
hoping too much?

Also, what company would be interested in buying this policy? On some
literature I have been sent (by Countrywide of course!) it says that
it's unlikely to sell because it is unit linked. Now is this BS
because they want me to keep paying in, or is this true?

Would be great to hear anyones opnions.
cheers
Andy
Hi Andy.

I would go for option a.

I had a unit-linked endowment policy from 1988 and my gut feeling was to
cash it in last year. The surrender value just equalled the 15 years
premiums paid. Was on target for a GBP20,000 shortfall on a 45,000
policy, if I was lucky! As you say, no-one wants to buy a unit-linked
policy.

Take the 2k loss now rather than a greater one down the line. IMO 6% is
highly unlikely.

Cheers,
Martin.
 
M

MM

Hi, I'd like to seek the opinion of you guys.

I have had a Countrywide Assured Endowment policy running for the last
8 years. Yes Yes.. another one for the statistics!

I am now disconnecting the endowment from my mortage and going over to
a repayment flexible mortage type at 5.7% interest (one account
flexible) over 16years.

The endowment plan has this year grown at 6%, but over the last 5
years it has been utter crap at around -3%. It is now worth ~3.5k
(been putting in 55GBP per month for 8 years). I understand all of
the issues with management charges consuming a lot of the money in the
early years.

If you were my position would you:

(a) Surrender/sell it at a loss of just under 2k, and then dump this
into the flexible mortgage saving 5.7% interest on the sum. And then
put the 55GBP I would have paid into the endowment, into the mortgage
for the rest of the term.

(b) Keep it as a long term saving and hope it retains 6% average (is
this likely?) and make a reasonable sum at the end. Now am I just
hoping too much?

Also, what company would be interested in buying this policy? On some
literature I have been sent (by Countrywide of course!) it says that
it's unlikely to sell because it is unit linked. Now is this BS
because they want me to keep paying in, or is this true?

Would be great to hear anyones opnions.
cheers
Andy
PS. dont email the above address its a spam bucket, I dont look at it
I would second this request for information! I no longer "need" my
endowment policy, as I paid off the mortgage ages ago. But I have kept
up the monthly payments into it. I could cash it in now instead of
waiting till maturity in a few years' time, when the expected "bonus"
is likely to be miniscule, contrary to what was said at the time it
was opened, when endowment mortgages were seen (and recommended) as
the best thing since sliced bread. The Standard Life recommended I
look to the open market in order to achieve a higher value, but I am
wary of shysters. I can trust Standard Life, but are there really,
truly any IFAs out there whom one can equally trust?

MM
 
R

Richard Faulkner

Andy Fell said:
Hi, I'd like to seek the opinion of you guys.

I have had a Countrywide Assured Endowment policy running for the last
8 years. Yes Yes.. another one for the statistics!

I am now disconnecting the endowment from my mortage and going over to
a repayment flexible mortage type at 5.7% interest (one account
flexible) over 16years.

The endowment plan has this year grown at 6%, but over the last 5
years it has been utter crap at around -3%. It is now worth ~3.5k
(been putting in 55GBP per month for 8 years). I understand all of
the issues with management charges consuming a lot of the money in the
early years.

If you were my position would you:

(a) Surrender/sell it at a loss of just under 2k, and then dump this
into the flexible mortgage saving 5.7% interest on the sum. And then
put the 55GBP I would have paid into the endowment, into the mortgage
for the rest of the term.

(b) Keep it as a long term saving and hope it retains 6% average (is
this likely?) and make a reasonable sum at the end. Now am I just
hoping too much?

Also, what company would be interested in buying this policy? On some
literature I have been sent (by Countrywide of course!) it says that
it's unlikely to sell because it is unit linked. Now is this BS
because they want me to keep paying in, or is this true?

Would be great to hear anyones opnions.
cheers
Andy
PS. dont email the above address its a spam bucket, I dont look at it
It is always possible that you have taken the biggest hit in terms of
bad performance, and maybe the insurance companies have learnt their
lesson in investment. If this were your view, you would keep it going.

However, if you are now risk averse, and given that you can "guarantee"
a saving by using it to pay down the capital on your mortgage, perhaps
this is the sensible option.

You wont be able to sell it for more than it is worth because it is unit
linked, and its' value is what it is.
 
A

Andy Fell

Richard Faulkner said:
It is always possible that you have taken the biggest hit in terms of
bad performance, and maybe the insurance companies have learnt their
lesson in investment. If this were your view, you would keep it going.

However, if you are now risk averse, and given that you can "guarantee"
a saving by using it to pay down the capital on your mortgage, perhaps
this is the sensible option.

You wont be able to sell it for more than it is worth because it is unit
linked, and its' value is what it is.
Hi, thanks for your inputs guys. My gut feeling is for (a) also, but
I was wondering if other (more knowledgeable on finance) people would
do this as well.

The other thing is that I was sold this policy when I was recent out
of uni and admittedly a bit green on these issues. I think the guy
who sold me this saw me coming!! :D

I have since grown older and wised up a little (maybe ignorance was
bliss). At the time I understood the stuff about it being a 'risk',
but didn't really appreciate how much of the hard sell I was being
given at the time. The guy didn't really go into great depths to
explain repayment mortgages, he only said they were more expensive
(yes, he worked for Hambro!!). Surprise surprise guess which one I
went for. Looking back on it I now think what a stupid twat I was,
but thats life I guess! My policy document only gives predictions
based on a term growth of 5 percent and upwards, which looking at the
current situation would be more than optimistic. If I answer the
questions on a 'could you receive compensation' website honestly, then
I think Countrywide would assume that I understood the risks..
Somehow I don't think I really did, but the b****d still managed a
sale!

shit


Andy
 
D

Daytona

The other thing is that I was sold this policy when I was recent out
of uni and admittedly a bit green on these issues. I think the guy
who sold me this saw me coming!! :D
Indeed, no fault of yours, but you were almost certainly targeted for
precisely that reason given Hambros record.
I have since grown older and wised up a little (maybe ignorance was
bliss). At the time I understood the stuff about it being a 'risk',
but didn't really appreciate how much of the hard sell I was being
given at the time. The guy didn't really go into great depths to
explain repayment mortgages, he only said they were more expensive
If he said that without qualification, I'd say that opens the way for
a miselling complaint. The endowment monthly payments may have been
cheaper, but it's impossible to know the end result, 25 years down the
line.
Looking back on it I now think what a stupid twat I was,
but thats life I guess!
I disagree. imo people should not have to know about the subject; they
should be able to trust the advice.
If I answer the
questions on a 'could you receive compensation' website honestly, then
I think Countrywide would assume that I understood the risks..
Somehow I don't think I really did, but the b****d still managed a
sale!
I'd be minded to launch a complaint and let the regulator decide,
that's what they're there for. Beware of rip off 3rd party claims
organisations. Try the FSA <URL:http://www.fsa.gov.uk/consumer/> and
Consumers Association Endowment Action sites
<URL:http://www.which.net/endowmentaction/>

hth

Daytona
 
D

Daytona

The endowment plan has this year grown at 6%, but over the last 5
years it has been utter crap at around -3%. It is now worth ~3.5k
(been putting in 55GBP per month for 8 years). I understand all of
the issues with management charges consuming a lot of the money in the
early years.
The problem is likely to have been caused by the choice of an
endowment over an index tracker. Did it have a life assurance element
? Was this required both by the mortgage company & your circumstances
? Subtracting £10 for life assurance, £45 for 96 months is a total
investment of £4,320, an index tracker would have returned approx.
£4,000. As regards the ULE 6% increase over the year, the stock
market, and hence an index tracker, rose by ~8.6%, which is close to
the long term average.
If you were my position would you:
Even if the UL endowment fund was invested in other things such as
property the figures are still unattractive compared with the risk
free return you get from paying down the mortgage imo. Therefore I'd
go for option a. You will be able to see the effect this has by
plugging the lump sum & monthly payments into the One account
calculator.

Daytona
 
R

Ronald Raygun

Andy said:
Hi, I'd like to seek the opinion of you guys.

I have had a Countrywide Assured Endowment policy running for the last
8 years. Yes Yes.. another one for the statistics!

I am now disconnecting the endowment from my mortage and going over to
a repayment flexible mortage type at 5.7% interest (one account
flexible) over 16years.
What do you mean "disconnecting"? It was almost certainly never
really "connected" except in your mind. It's nothing but a savings
plan, with a bit of life insurance built in. Whether it's meant to
pay off an interest-only house purchase loan or fund a mega-party on
maturity is neither here nor there.
The endowment plan has this year grown at 6%, but over the last 5
years it has been utter crap at around -3%. It is now worth ~3.5k
(been putting in 55GBP per month for 8 years). I understand all of
the issues with management charges consuming a lot of the money in the
early years.

If you were my position would you:

(a) Surrender/sell it at a loss of just under 2k, and then dump this
into the flexible mortgage saving 5.7% interest on the sum. And then
put the 55GBP I would have paid into the endowment, into the mortgage
for the rest of the term.

(b) Keep it as a long term saving and hope it retains 6% average (is
this likely?) and make a reasonable sum at the end. Now am I just
hoping too much?
You forgot option (c) which is to make the policy "paid-up". This
involves leaving the value which is there already to grow until
maturity (or until you change your mind and surrender/sell it at
a later date), while simply not making any further contributions.
This has the double advantage of freeing up cashflow to divert into
the repayment mortgage, while avoiding any potential loss by selling
or surrendering.
Also, what company would be interested in buying this policy? On some
literature I have been sent (by Countrywide of course!) it says that
it's unlikely to sell because it is unit linked. Now is this BS
because they want me to keep paying in, or is this true?
It's true. Buyers are looking for above-average return, and are
more keen on with-profits policies. Unit-linked ones are basically
just worth what the units are, and you could sell those yourself.

I'd go for option (d) which is to postpone your decision for a
couple of years. If it's turned -3% into +6%, they must be
doing something right, and it's worth watching. Also, if life
cover is worth having (i.e. if you have family), then don't
forget that part of your payments are actually insurance premiums
which you would wish to be paying anyway even if the investment
element were not of interest.
 
A

Andy Fell

Daytona said:
(e-mail address removed) (Andy Fell) wrote:


The problem is likely to have been caused by the choice of an
endowment over an index tracker. Did it have a life assurance element
? Was this required both by the mortgage company & your circumstances
? Subtracting £10 for life assurance, £45 for 96 months is a total
investment of £4,320, an index tracker would have returned approx.
£4,000. As regards the ULE 6% increase over the year, the stock
market, and hence an index tracker, rose by ~8.6%, which is close to
the long term average.
Indeed. At the time I admitt I didn't have a clue. The guy really
got me. There were no explainations of the different types of managed
funds or past history of fund performance shown. Comparisons between
repayment mortgages and interest only mortgages were shown on the back
of fag packet. I had no information on the differences between with
profits and UL, in fact I didn't even know what they were.. I thought
it was just an 'endowment'..

Although... I did receive the key features document and have written
info on 'what I will get back over so many years' (forecasts for 5%,
7.5% and 10% given). There was no true explaination on life assurance
and as far as I know it was for me, included in the plan.

Even if the UL endowment fund was invested in other things such as
property the figures are still unattractive compared with the risk
free return you get from paying down the mortgage imo. Therefore I'd
go for option a. You will be able to see the effect this has by
plugging the lump sum & monthly payments into the One account
calculator.
Yes exactly.. I have done this and it shows that (given my current
situation) if I do this I can get rid of the damn mortgage in just
under 9years.

I think you guys have confirmed my thoughts for me, thank you! In the
mean time I'm going to try the complaints procedure and see if I get
any joy. Could be a tricky one though, I cannot deny Hambro told me
there was a risk, but I can say Hambro took advantage of naivety. I
think I could be knackered, but it's worth a try. It probably just
sounds like I'm annoyed because of my crap investment strategy, but
there must be something in it?

Got any suggestions for good complaints one liners about taking new
grads from the rear? ;-) I think I had 'sucker' written on my
forehead with special ink only shysters like Hambro could see in the
daylight.

Thanks for your help, most useful.

Cheers
Andy
 
M

Martin Goldthorpe

Raygun said:
I'd go for option (d) which is to postpone your decision for a
couple of years. If it's turned -3% into +6%, they must be
doing something right, and it's worth watching. Also, if life
cover is worth having (i.e. if you have family), then don't
forget that part of your payments are actually insurance premiums
which you would wish to be paying anyway even if the investment
element were not of interest.
I'd support that. I have an under-performing Friends Provident
endowment that's been running for 16 years and not assigned
to a mortgage. I got a surrender value recently, and then
tried to get a traded endowment quote. Those that quoted
(on-line) couldn't better the surrender value. Anyway, I
monitor the surrender value on a monthly basis via the Friends
website. It's actually been increasing at a much larger rate
than I could invest it: even of I took very large risks.
The death payout is presently about 3.5 time the surrender
value.
M
 
D

Daytona

In the
mean time I'm going to try the complaints procedure and see if I get
any joy. Could be a tricky one though, I cannot deny Hambro told me
there was a risk, but I can say Hambro took advantage of naivety. I
think I could be knackered, but it's worth a try. It probably just
sounds like I'm annoyed because of my crap investment strategy, but
there must be something in it?
So, as I mentioned in my other post, if you were told repayment
mortgages were more expensive as an unqualified statement and/or you
were sold life assurance bundled in with the endowment that the
mortgage company didn't require (i.e. if you die they simply take the
house) and you had no dependents, then try making the complaint on
that basis.

Daytona
 
M

MM

I'd support that. I have an under-performing Friends Provident
endowment that's been running for 16 years and not assigned
to a mortgage. I got a surrender value recently, and then
tried to get a traded endowment quote. Those that quoted
(on-line) couldn't better the surrender value. Anyway, I
monitor the surrender value on a monthly basis via the Friends
website. It's actually been increasing at a much larger rate
than I could invest it: even of I took very large risks.
The death payout is presently about 3.5 time the surrender
value.
Would Standard Life's surrender value + 10% be achievable elsewhere do
you think?

MM
 
J

john boyle

Martin Goldthorpe said:
I'd support that. I have an under-performing Friends Provident
endowment that's been running for 16 years and not assigned
to a mortgage. I got a surrender value recently, and then
tried to get a traded endowment quote. Those that quoted
(on-line) couldn't better the surrender value. Anyway, I
monitor the surrender value on a monthly basis via the Friends
website. It's actually been increasing at a much larger rate
than I could invest it: even of I took very large risks.
The death payout is presently about 3.5 time the surrender
value.
What fund(s) is it invested in?
 
J

john boyle

Ronald said:
I'd go for option (d) which is to postpone your decision for a
couple of years. If it's turned -3% into +6%, they must be
doing something right, and it's worth watching. Also, if life
cover is worth having (i.e. if you have family), then don't
forget that part of your payments are actually insurance premiums
which you would wish to be paying anyway even if the investment
element were not of interest.
I think we need to know what fund(s) the policy is investing in. Most
funds which are managed by life companies are pretty poor performers and
a better return would be obtained from a decent Unit Trust, possibly
held in an ISA.
 
A

Andy Fell

john boyle said:
I think we need to know what fund(s) the policy is investing in. Most
funds which are managed by life companies are pretty poor performers and
a better return would be obtained from a decent Unit Trust, possibly
held in an ISA.
See this:
http://www.countrywideassured.co.uk/funds/past_investment.html
Mine is the Managed fund.

Target is GBP32,300. Amount in 16 yrs 8mths is GBP24,100 at 6% per
year.

I cannot stop paying into the policy and leave the existing sum.. The
cheeky $$$$$$'s have got it covered.. I've only just found out about
this:
"If your Policy has a value, then your protection benefits will
continue. The cost of maintaining your protection benefits will be
deducted from the value of your Policy until this value has run out.
Your protection benefits will then end."... Great, huh! There is no
option to cancel the benefits, I was led to believe on the phone the
other day.

I can't see how it can compete with paying down captial on the
mortgage at the current 5.7% rate.. unless I am missing something?

Cheers
Andy
 
A

Andy Fell

Ronald Raygun said:
Andy Fell wrote:

What do you mean "disconnecting"? It was almost certainly never
really "connected" except in your mind.
Nothing complicated, I just mean I no longer need it for paying my
mortgage at the end of the term.
You forgot option (c) which is to make the policy "paid-up". This
involves leaving the value which is there already to grow until
maturity (or until you change your mind and surrender/sell it at
a later date), while simply not making any further contributions.
This has the double advantage of freeing up cashflow to divert into
the repayment mortgage, while avoiding any potential loss by selling
or surrendering.
Problem with this is : (Quote from website)

"If your Policy has a value, then your protection benefits will
continue. The cost of maintaining your protection benefits will be
deducted from the value of your Policy until this value has run out.
Your protection benefits will then end."
couple of years. If it's turned -3% into +6%, they must be
doing something right, and it's worth watching. Also, if life
cover is worth having (i.e. if you have family), then don't
forget that part of your payments are actually insurance premiums
which you would wish to be paying anyway even if the investment
element were not of interest.
Maybe, I can't decide... and its complicated to work out exactly :)
It does look like it may be picking up so might be worth waiting a
couple of years so that it might at least equal what I paid in.

I don't have any dependants, so life assurance at this present time is
of no consequence to me.

Cheers
Andy
 
A

Andy Fell

Daytona said:
were sold life assurance bundled in with the endowment that the
mortgage company didn't require (i.e. if you die they simply take the
house) and you had no dependents, then try making the complaint on
that basis.
Must admitt I cannot get 'em on life assurance.. At the time it was
taken out as a joint policy with my partner. We have since gone our
seperate ways, but I had the policy changed to my name only.

Andy
 
J

john boyle

Andy Fell said:

This is a very poor fund. It under performs its sector and its peers.
Its crap.
Target is GBP32,300. Amount in 16 yrs 8mths is GBP24,100 at 6% per
year.
Do you mean it has 16 years to go or that you have had it for 16 years?
The 6% is totally meaningless. According to S&P it has actually grown by
3.7% in the last 12 months against a sector average of 8.87. A
mainstream UT such as Jupiter Income (which I have been quoting here for
almost 10 years) has returned over 17% in same period.
I cannot stop paying into the policy and leave the existing sum.. The
cheeky $$$$$$'s have got it covered.. I've only just found out about
this:
"If your Policy has a value, then your protection benefits will
continue. The cost of maintaining your protection benefits will be
deducted from the value of your Policy until this value has run out.
Your protection benefits will then end."... Great, huh! There is no
option to cancel the benefits, I was led to believe on the phone the
other day.
I can't see how it can compete with paying down captial on the
mortgage at the current 5.7% rate.. unless I am missing something?
No, you are not. Surrender the policy, use the dosh to reduce your
mortgage. Convert the mortgage to a repayment, but if you need life
insurance to cover the mortgage first go to an IFA and get a quote for
decreasing term insurance for the reduced mortgage balance over the
remaining term and if you like the figure (taking into account the
higher mortgage payment you will be making) apply for the new life cover
and when it is accepted then surrender the crap country wide policy.
 
J

john boyle

In message <3c0fc0f3.0410141041.4847b008@posting.google.com>, Andy Fell


Only read this after I replied to your other posting....
It does look like it may be picking up so might be worth waiting a
couple of years so that it might at least equal what I paid in.
NO!!!! Its crap.
I don't have any dependants, so life assurance at this present time is
of no consequence to me.

Pack it in now then, i.e. right away, today, now.
 
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M

Martin Goldthorpe

I'd support that. I have an under-performing Friends Provident
endowment that's been running for 16 years and not assigned
to a mortgage. I got a surrender value recently, and then
tried to get a traded endowment quote. Those that quoted
(on-line) couldn't better the surrender value. Anyway, I
monitor the surrender value on a monthly basis via the Friends
website. It's actually been increasing at a much larger rate
than I could invest it: even of I took very large risks.
The death payout is presently about 3.5 time the surrender
value.
What fund(s) is it invested in?[/QUOTE]

It's with-profits, but Friends Prov, like most of the
industry has been moving out of equities into fixed
interest etc.
MRG
 

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