Growth rate for endowments

Discussion in 'Finance, Property, Law' started by buryfc66, Mar 7, 2011.

Welcome to the Army Rumour Service, ARRSE

The UK's largest and busiest UNofficial military website.

The heart of the site is the forum area, including:

  1. I've done a search and can't find anything so can anybody help or point me in the right direction. I have an endowment (not linked to a mortgage thankfully) can anybody tell me what the current growth rate is for endowments.

    Cheers in advance.
  2. I'm in a similar position with 2 about to mature at the end of this year, they have run their respective lives of 19 years and 16 years and have lost about a third of their supposed maturity value. I have de-linked them from my mortgage as well, I was going to sell them, there is a market out there, but was advised to keep them as they are the cheapest life insurance for someone of my age (over 50) I'll take what I can at the end of the year. S_T
  3. I've been advised mine will only be worth approx 50% of their original projected worth, I did toy with the idea of selling it a few years ago but seeing I changed my mortgage it just became another savings plan, ditto on the life insurance and will be a nice little nest egg to put towards my next property. I'm guessing as they are predicting it's worth with 3 quotes I'll probably be going with the lower one at 4% growth which I'll settle for. Cheers chaps.
  4. Well done on nearing the end of your 25 year contract! Based on what I remember of my policy and keeping it very simple, you have been told the current value. They are required to tell you what the policy will be worth when it matures assuming several growth options. The problem is that these policies have not done well over the last 10-15 years - in line with the wider stock market.

    I would take the lower forecast with a large pinch of salt!

    Now, Clerical Medical told me annually what the policy was worth. When it paid out, I received the stated value and a considerable terminal bonus. Kerching! I was very happy as I'd had 25 years of life assurance and received about 12% pa growth, IIRC.

    So, keep it running to the end. The terminal bonus is valuable and all the charges were paid by you in the first 5-10 years.

  5. Sixty

    Sixty LE Moderator Book Reviewer
    1. ARRSE Cyclists and Triathletes

    Assuming it's a traditional with profits rather than a unit-linked one, they don't really work like that.

    You'd be better off looking at your sum assured plus attaching bonuses as your minimum. You're really counting on the terminal bonus here (never guaranteed and not factored in to the projection) since reversionary bonuses are uniformly low and have been for at least the last five years.
  6. Yes, there is a market for up and running life assurance policies... because most people do not realise the value of the terminal bonus. Keep it running to the end.

  7. Yes I will be keeping them to the end, I live in hope that the terminal bonus will be worthwhile, but shan't hold my breath. I've seen what friends have attained on their recently maturing policies. I lost several £k's on 3 others that ran their course which should have realised more over the 25 years when they paid out in 2008.

    Mine was one of the few companies (Eagle Star) who apparently would not publish their growth figures, subsequently taken over by Zurich. I do have the annual statements which show the current value but it's the bonus which will be most interesting as you say.

  8. Endowments seem to be the pits. Had to de-link two of mine from my mortgage because they were inadequate (admittedly one was a low-start - first home, ahh memories). Seems like if you took one out in the 70's or 80's they performed well. If it's the 90's watch out (the only finances performing well was the human variety getting massive bonuses).
  9. Gents thanks for the feedback, I usually take the annual statements with a pinch of salt but as long as I recieve an half decent return I'll be happy, it'll be a welcome addition to the savings especially if I'm one of the unlucky few on the redundancy front.
  10. The performance of the old-style endowment policy was much helped by the tax relief that was available when you signed up to it and by the tax free nature of the underlying fund.

    They were sold in the 1970s, quite rightly, as a 25 year life assurance policy and a tax-free long-term savings account.

    But, in the 1980s, the tax relief was removed (which could have been worth up to 80% or more). Gordon Brown then taxed dividends at 10% and imposed the insurance premium tax. The AIDS scare in the 1980s didn't help as life insurance premiums rocketed which meant that less money was available to be invested for the long-term. Finally, the poor performance of the stock market over the last 10-15 years hasn't helped.

    I did well out of my 70s something policy but later ones have not done well and I wonder if they will die out?

    If you have one, keep it going until the bitter end.

    Or, sell it to me and then hide everytime the doorbell rings.... ;)

  11. I have my first endowment with the Coop paying out at the end of next month (25 year) - God I feel old - and will let you know how it pays. Only utilised as a savings plan following all the horror stories of mis-sellings etc.
  12. I had 2 25 yr endowment policies which were meant to pay off the mortgage (£25000). They didn't, paid out about £13000.
  13. If interest rates rocket they may be worth something otherwise stick £5 notes under the mattress.