Endowment - What can I expect?
Discussion
Many years ago, in a moment of unusual sobriety I took out a little endowment policy, seemed like a good idea at the time and it sounded very grown up. The monthly contribution was only the price of a couple of rounds of drinks so I've largely ignored it being there.
Fast forward 19 years and I get an annual statement (I've had others and just filed them away) but this year I decided to try and decipher it.
Apparently it's a 'unitised with profits fund'.
I don't consider myself to be particularly thick/intelligent, but what does all this mean?
Date of maturity = 01/09/2013, I'm guessing this is when the policy 'pays out'.
Minimum death benefit = £4740, again looks self explanatory in that if I kick the bucket between now and the maturity date 'er indoors gets enough to go for a fortnight in the sun...
Basic Units as at 31/12/2011 (excl bonus) = 4741.573
Previous Bonus Units = 740.037
New Bonus Units = 114.371
Total with profits value as at 31/12/2011 = £5595.98
So - what will my ignored nestegg be worth / how long is a piece of string?
Fast forward 19 years and I get an annual statement (I've had others and just filed them away) but this year I decided to try and decipher it.
Apparently it's a 'unitised with profits fund'.
I don't consider myself to be particularly thick/intelligent, but what does all this mean?
Date of maturity = 01/09/2013, I'm guessing this is when the policy 'pays out'.
Minimum death benefit = £4740, again looks self explanatory in that if I kick the bucket between now and the maturity date 'er indoors gets enough to go for a fortnight in the sun...
Basic Units as at 31/12/2011 (excl bonus) = 4741.573
Previous Bonus Units = 740.037
New Bonus Units = 114.371
Total with profits value as at 31/12/2011 = £5595.98
So - what will my ignored nestegg be worth / how long is a piece of string?
Most policies with a "unitised with profits fund" actually have more than one kind of unit, the idea being to disguise the fact that one of the types of unit represents the up front charges made by the insurer to pay the seller's commission which, in your case, was paid some years ago.
Your best bet is to ask the insurer now for a forcast of the maturity value. Ask too if there's a market value adjuster clause (or look for it in the policy document). If there is this will enable them to make a discretionary deduction at the time of maturity to reflect any severe fluctuations in the markets; they will say it's to protect the assets of their remaining policyholders which some may consider to be baloney!
R.
Your best bet is to ask the insurer now for a forcast of the maturity value. Ask too if there's a market value adjuster clause (or look for it in the policy document). If there is this will enable them to make a discretionary deduction at the time of maturity to reflect any severe fluctuations in the markets; they will say it's to protect the assets of their remaining policyholders which some may consider to be baloney!
R.
Eric Mc said:
Probably between £5,000 and £6,000
The policy can't pay out less than the current guaranteed amount i.e. 4741.573 + 740.037 + 114.371 = £5,595.98The payout on death prior to maturity is the same i.e £5,595.98 as this exceeds the minimum death benefit.
In addition there is likely to be some sort of terminal bonus which might increase the payout further, possibly even beyond £6,500.
Sidicks
Edited by sidicks on Tuesday 31st July 20:17
The Leaper said:
Most policies with a "unitised with profits fund" actually have more than one kind of unit, the idea being to disguise the fact that one of the types of unit represents the up front charges made by the insurer to pay the seller's commission which, in your case, was paid some years ago.
Your best bet is to ask the insurer now for a forcast of the maturity value. Ask too if there's a market value adjuster clause (or look for it in the policy document). If there is this will enable them to make a discretionary deduction at the time of maturity to reflect any severe fluctuations in the markets; they will say it's to protect the assets of their remaining policyholders which some may consider to be baloney!
R.
1) As you suggest, the whole point of initial units is to recover initial costs including commission. However at maturity these would be irrelevant.Your best bet is to ask the insurer now for a forcast of the maturity value. Ask too if there's a market value adjuster clause (or look for it in the policy document). If there is this will enable them to make a discretionary deduction at the time of maturity to reflect any severe fluctuations in the markets; they will say it's to protect the assets of their remaining policyholders which some may consider to be baloney!
R.
2) Most policies would have a clause that means that an MVA cannot be applied at maturity (or death), and indeed, as I've outlined in my previous post it is likely that a terminal bonus is due.
Sidicks
Edited by sidicks on Tuesday 31st July 20:18
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