Hello, I would appreciate comments on the best thing to do with this.

In April 1988 I took a 25 Year endowment with Royal , now Phoenix.  I
pay £33 a month with  guaranteed death benefit £25,500.
The policy is due to end 25 April 2013

I just got these figures through in their annual letter.

Basic Guaranteed sum assured. £7,803 , plus previous bonuses £5,049
plus this years bonus £32.13 equals a total current value £12884.000
My choices are
1/ I could cash the policy in now and get a lump sum of approx £13000.
(would check  if I could do better selling it than cashing it in, how
could I search for who would offer the bast return?)
2/ I could freeze its current value, it would still get annual
bonuses, and terminal benefit (26% of its value)
3/ I could just carry on paying into it. With a terminal benefit of
26% of its terminal value.

I don't need the money at the moment, death benefit isn't an issue and
paying £33 a month is no problem.

Purely financially bearing in mind my circumstances outlined, I would
really appreciate some guidance on the best thing to do please.

Thank you very much,  Anne Boyd.

Anne.Boyd41@googlemail.com wrote:
> Hello, I would appreciate comments on the best thing to do with this.
>
> In April 1988 I took a 25 Year endowment with Royal , now Phoenix.  I
> pay £33 a month with  guaranteed death benefit £25,500.
> The policy is due to end 25 April 2013
>
> I just got these figures through in their annual letter.
>
> Basic Guaranteed sum assured. £7,803 , plus previous bonuses £5,049
> plus this years bonus £32.13 equals a total current value £12884.000
> My choices are
> 1/ I could cash the policy in now and get a lump sum of approx £13000.
> (would check  if I could do better selling it than cashing it in, how
> could I search for who would offer the bast return?)
> 2/ I could freeze its current value, it would still get annual
> bonuses, and terminal benefit (26% of its value)
> 3/ I could just carry on paying into it. With a terminal benefit of
> 26% of its terminal value.
>
> I don't need the money at the moment, death benefit isn't an issue and
> paying £33 a month is no problem.
>
> Purely financially bearing in mind my circumstances outlined, I would
> really appreciate some guidance on the best thing to do please.
>
> Thank you very much,  Anne Boyd.

There are difficulties in the way of giving you the advice that you seek. 
One has to be duly authorised to give such advice, for just one thing.

I would observe that the £13k is NOT what you would get if you cashed it in 
now - you need to ask for a surrender value.

-- 
FERGUS O'ROURKE
www.irish-lawyer.com
(Not just law stuff)

"Fergus O'Rourke"  wrote in message 
news:6d6n9gF13qf1U1@mid.individual.net...
> Anne.Boyd41@googlemail.com wrote:
>> Hello, I would appreciate comments on the best thing to do with this.
>>
>> In April 1988 I took a 25 Year endowment with Royal , now Phoenix.  I
>> pay £33 a month with  guaranteed death benefit £25,500.
>> The policy is due to end 25 April 2013
>>
>> I just got these figures through in their annual letter.
>>
>> Basic Guaranteed sum assured. £7,803 , plus previous bonuses £5,049
>> plus this years bonus £32.13 equals a total current value £12884.000
>> My choices are
>> 1/ I could cash the policy in now and get a lump sum of approx £13000.
>> (would check  if I could do better selling it than cashing it in, how
>> could I search for who would offer the bast return?)
>> 2/ I could freeze its current value, it would still get annual
>> bonuses, and terminal benefit (26% of its value)
>> 3/ I could just carry on paying into it. With a terminal benefit of
>> 26% of its terminal value.
>>
>> I don't need the money at the moment, death benefit isn't an issue and
>> paying £33 a month is no problem.
>>
>> Purely financially bearing in mind my circumstances outlined, I would
>> really appreciate some guidance on the best thing to do please.
>>
>> Thank you very much,  Anne Boyd.
>
> There are difficulties in the way of giving you the advice that you seek. 
> One has to be duly authorised to give such advice, for just one thing.
>
> I would observe that the £13k is NOT what you would get if you cashed it 
> in now - you need to ask for a surrender value.
>
> -- 
> FERGUS O'ROURKE
> www.irish-lawyer.com
> (Not just law stuff)
>

Interesting observation, that (needing to be authorised). If any authorised 
individual gave what might be deemed to be advice on a NG he'd probably be 
censured. for it. He'd need to know basic things like date of birth, marital 
status, attitude to risk, income, etc etc. Most people who respond to 
questions don't know these things. I imagine that the regulator (FSA) turns 
a blind eye to this, otherwise the world wouldn't go round.

I wonder whether anyone who has been given advice here would take the 
adviser to court if it turned out to be wrong. We should remember that 
anyone asking for advice is (a) not paying for it (b) doesn't know how 
knowledgeable the adviser is. So he has to take his own life is his own 
hands, so to speak.

Rob Graham

On 3 Jul, 18:52, Anne.Boy...@googlemail.com wrote:
> Basic Guaranteed sum assured. £7,803 , plus previous bonuses £5,049
> plus this years bonus £32.13 equals a total current value £12884.000
> My choices are
> 1/ I could cash the policy in now and get a lump sum of approx £13000.
> (would check  if I could do better selling it than cashing it in, how
> could I search for who would offer the bast return?)

Assuming £7 of the £33 is for term life insurance, monthly investments
of £26 in the stock market would have grown to ~£13,120 by now. [1]

Here's the basics from the regulator, the Financial Services Authority
(FSA) -
http://www.moneymadeclear.fsa.gov.uk/products/with-profits/what_to_do.html

By all means get a surrender value from Phoenix, but it's rare for the
originator to offer the best value. Is a MVA in operation ?

Here's the link mentioned by the FSA to the Association of Policy
Market Makers who circulate your details to their members to give you
quotes. It seems like a good system -
http://www.apmm.org/selling.asp

The annual charges will almost certainly be higher than those of a DIY
equilvilent using Exchange Traded Funds (ETF) and ISAs.

> 2/ I could freeze its current value, it would still get annual
> bonuses, and terminal benefit (26% of its value)
> 3/ I could just carry on paying into it. With a terminal benefit of
> 26% of its terminal value.

Terminal benefits are just esitimates as far as I'm concerned.

What to do with it really depends upon whether there's an MVA.

Info. in life insurance -
http://www.moneymadeclear.fsa.gov.uk/products/insurance/types/income/life_insurance.html

By all means get *independent* financial advice, but due to the amount
of mis-selling post the recommendations here for a double check first.

There's a good forum here, and a search on 'Phoenix' reveals some
discussions which may prove useful. I'd post there as well -

http://www.fool.co.uk/search/Index.aspx?site=UKBoards&mbbid=50083&mbmid=&filter=p&q=Phoenix

hth

Daytona

[1]
http://www.fool.co.uk/Your-Money/guides/How-To-Use-The-Calculators.aspx
http://www.finfacts.ie/Private/curency/equitystudyusukstocks.htm

robgraham wrote:

> "Fergus O'Rourke"  wrote in message
> news:6d6n9gF13qf1U1@mid.individual.net...
>> Anne.Boyd41@googlemail.com wrote:
>>> Hello, I would appreciate comments on the best thing to do with this.
>>>
>>> In April 1988 I took a 25 Year endowment with Royal , now Phoenix.  I
>>> pay £33 a month with  guaranteed death benefit £25,500.
>>> The policy is due to end 25 April 2013
>>>
>>> I just got these figures through in their annual letter.
>>>
>>> Basic Guaranteed sum assured. £7,803 , plus previous bonuses £5,049
>>> plus this years bonus £32.13 equals a total current value £12884.000
>>> My choices are
>>> 1/ I could cash the policy in now and get a lump sum of approx £13000.
>>> (would check  if I could do better selling it than cashing it in, how
>>> could I search for who would offer the bast return?)
>>> 2/ I could freeze its current value, it would still get annual
>>> bonuses, and terminal benefit (26% of its value)
>>> 3/ I could just carry on paying into it. With a terminal benefit of
>>> 26% of its terminal value.
>>>
>>> I don't need the money at the moment, death benefit isn't an issue and
>>> paying £33 a month is no problem.
>>>
>>> Purely financially bearing in mind my circumstances outlined, I would
>>> really appreciate some guidance on the best thing to do please.
>>>
>>> Thank you very much,  Anne Boyd.
>>
>> There are difficulties in the way of giving you the advice that you seek.
>> One has to be duly authorised to give such advice, for just one thing.
>>
>> I would observe that the £13k is NOT what you would get if you cashed it
>> in now - you need to ask for a surrender value.
> 
> Interesting observation, that (needing to be authorised).

Quite so, it is an utterly false observation.  There is no way anyone
can be prohibited from giving (free) advice of any kind on any matter
to any person, ever (at all at all, as the Irish say).  :-)

Regulation, authorisation, and indemnity issues only arise when the
advice is given in exchange for payment.

> If any
> authorised individual gave what might be deemed to be advice on a NG he'd
> probably be censured. for it.

I doubt that very much.

> He'd need to know basic things like date of
> birth, marital status, attitude to risk, income, etc etc.

Perhaps, sometimes, but not necessarily.

> Most people who
> respond to questions don't know these things.

Agreed, but, you know, most people who *ask* the questions don't know
either.  Well, OK, most people do know their date of birth and marital
status and income (but not necessarily their future marital status and
income), but attitude to risk is not so easy to pin down.

Attitude to risk might come into the picture when someone is deciding
whether to start an endowment-style investment plan at all, and if so
then which one.  Attitude to risk is perhaps less important where the
plan is already in place, and has been for 20 years, and the question
now is whether it's better to let it run another 5 years to term or
to cash it in, sell it, or make it paid-up.

> I wonder whether anyone who has been given advice here would take the
> adviser to court if it turned out to be wrong. We should remember that
> anyone asking for advice is (a) not paying for it (b) doesn't know how
> knowledgeable the adviser is. So he has to take his own life is his own
> hands, so to speak.

Exactly.  The basis for taking someone to court for wrong advice would
be a civil action for damages, and proof that the adviser owed the
enquirer a duty of care would hinge on whether there was a contract in
force under the terms of which the advice was given.  In the absence of
consideration (the enquirer paying the adviser for the advice) there is
no contract.

The question our Anne seems to be asking is merely what the likeliest
projected financial outcomes of her four options are.  The maths is
straightforward, the problem is that the numbers one needs to plug into
the process are for the most part guesswork.

AIUI, it is the practice of endowment companies to operate with rather
a lot of smoke and mirrors, by avoiding putting a definitive value on
an investor's account, and instead applying a host of bonuses, many of
which are discretionary.  Typically a terminal bonus would be reduced
if the policy is cancelled prior to maturity, and this is why one can
often get more by selling it than by surrendering it (because the
purchaser will then get the benefit of the terminal bonus).  Generally
terminal bonus will not be lost when a policy is made paid-up (which is
what Anne has called "freezing" it, i.e. stopping payment of premiums,
so that only the existing value locked into the plan is left to grow,
but this value will not be boosted by the added value of the investment
element of future premiums).

No doubt Anne will have had the letters warning her that there is a
low/moderate/high risk that her endowment's maturity payout will fall
significantly short of the sum needed to repay her mortgage.  Presumably
she already has either made alternative arrangements to repay it or
even has already repaid it, so the only issue now is maximising what she
can get out of it.

My own instinct is that with only 5 years to run, it's probably not worth
changing anything so late in the day.  That means don't surrender and
don't sell.  It's probably not even worth making it paid-up.

In my own case the decision is more difficult because it has a bit longer
to run (10 years) and, though there isn't much to choose between the mid
projected maturity value and what I'd get by investing the surrender
value and future premiums elsewhere (even in cash savings) for 10 years,
there is always the possibility that in a 10-year time frame markets may
improve to the extent that the maturity value would be much better.  In
addition, there's the complication of Nonstandard Death's "Mortgage
Endowment Promise" which holds out the prospect (however slim) of a
top-up payment to reduce any shortfall, but the promise is withdrawn
in the even that the policy is made paid-up or is even partially sold
or surrendered.