Endowment Problem!! I'm being robbed by a PLC!

[crockers]

Great News!!!!

I have just had a call from the company today, and having listened to the tapes of my original conversation with them, they have admitted that they "had not been as clear as we could have been" and that "we gave you wrong information", and that they "should have explained further".

The upshot being that they are honouring the initial surrender value!

:bannana: :bannana: :bannana: :bannana: :bannana:

Thanks for all your help!

Thought they would once they heard the tapes.............. I know my old company would have --- god help the woman who will need "retraining"...lol

 

[crammy69]

As regards the life cover, the wife works for a mortgage broker (this week,at least) so she can arrange some extra cover at reasonable rates (I hope).

I do feel sorry for the original lady who took my call, but I get the impresion that this MV adjustment is such a rare thing that she could be forgiven for not mentioning it, hopefully she'll be OK.

Cheers

 

[Smiley]

The thing is, my confidence in the firm is at such a level that I rather lock in my 'loss' now whilst there is a definable amount available. My personal view on the Investment returns and potential upside in these sort of policies is far from optimistic. Im tired of their often misleading and opaque information, and never feel that I am given enougth information to make a rational investment decision, these airy fairy terminal bonuses etc are impossible to predict and factor in. I want my money!.

Exactly my view and its why I surrendered my o/s policy earlier this year, like you fed up with lack of transparency and 0.5% annual bonuses even when the stock market was performing well.

 

[Smiley]

Where are these people going to get customers from in the future. In my case my Life Assurance company has turned from a Mutual to a Bank. Consequently there's weasel words coming ten-a-penny about "no annual bonus, but that's to protect investors, blah blah".
So when they've matured will I consider another policy? Not on your life, never mind own life!
I think it's a route to oblivion for these companies.

I am not aware of any company that is pushing / selling endowments any more - thats part of the argument for getting out of them. I think their desirability will go down down and further down as the companies lose interest in this segment altogether - and by then the second hand buyers will have dried up as well fed up with poor returns - and then the companies will have even less motivation - viscious circle. I think these policies returns will only get worse and best to get out now or sooner - unless you only have 1 or 2 yrs left to go.

 

[Smiley]

As regards the life cover, the wife works for a mortgage broker (this week,at least) so she can arrange some extra cover at reasonable rates (I hope).

I do feel sorry for the original lady who took my call, but I get the impresion that this MV adjustment is such a rare thing that she could be forgiven for not mentioning it, hopefully she'll be OK.

Cheers

Basic life cover (should be called death cover really) is quite cheap unless you are over 90

MVAs have been around for years - but the advisor may not have known they were about to be applied - they were introduced w/c 21 October all of a sudden (funny that several companies announced them all at once ) - I know this as I had a 25 yr Norwich union policy mature the week before now theres a bit of luck.

 

[crammy69]

Happy days!, its all luck of the draw is'nt it, after all if I had called them up on the 29th I would have been none the wiser, although i would have been very disappointed to see the value below that of 18 months ago, and probably would have cut my losses in a fit of pique. Still Ill speak with them on Monay to get the final amount as Ive a sneaky suspicion that they may still have a little surprise up there sleeves..

 

[grober]

Armageddon!

Taking my inspiration from the movie Armageddon on the Beeb last night ( Love that movie for some reason- ah now I remember Liv Tyler ). As Mission control put it as the Space Station was blowing up
Get out of there!-- Get out of there NOW!!

 

[crammy69]

Taking my inspiration from the movie Armageddon on the Beeb last night ( Love that movie for some reason- ah now I remember Liv Tyler ). As Mission control put it as the Space Station was blowing up
Get out of there!-- Get out of there NOW!!

 

[crockers]

Exactly my view and its why I surrendered my o/s policy earlier this year, like you fed up with lack of transparency and 0.5% annual bonuses even when the stock market was performing well.

Not saying they are good investments or worth having BUT.... a bonus of 0.5% doesnt mean 0.5% growth.....just wanted to correct a misunderstanding...it is 0.5% of the sum assured..

 

[Smiley]

Not saying they are good investments or worth having BUT.... a bonus of 0.5% doesnt mean 0.5% growth.....just wanted to correct a misunderstanding...it is 0.5% of the sum assured..

Maybe but when I looked at the straight £ returns during a decent period of stock market performance it was utterly pathetic - a chimp could have done better - and actually the reason was that the surplus "profits " were not being distributed to the endowment policy holders but were being used to shore up the company and pay the shareholders a pretty tasty dividend. I sold it as I figured when times get tougher the returns will be even worse - I was not even thinking about having penalties sorry MVAs applied I was thinking about low returns.

 

[crockers]

Maybe but when I looked at the straight £ returns during a decent period of stock market performance it was utterly pathetic - a chimp could have done better - and actually the reason was that the surplus "profits " were not being distributed to the endowment policy holders but were being used to shore up the company and pay the shareholders a pretty tasty dividend. I sold it as I figured when times get tougher the returns will be even worse - I was not even thinking about having penalties sorry MVAs applied I was thinking about low returns.

Not defending with profits - BUT that statement needs proof before I would believe this ... is the fund a 100 / 0 fund or a 90 / 10 fund....

 

[Smiley]

Not defending with profits - BUT that statement needs proof before I would believe this ... is the fund a 100 / 0 fund or a 90 / 10 fund....

Not sure what you mean by a 100/0 or 90/10 fund sorry.
Standard Life (just to get very specific) can elect to 1. retain its profits for future years ie shore up the company 2. pay them to share holders via dividends or 3. pay them to endowment holders. And guess what is the least important in that list. It is the same total profits that were there before the shareholders came along - the "with profit" policy holders were the "shareholders" before. So there's your answer it should be no surprise to anyone. Imagine if Std Life were to cut the dividends to shareholders and maintain the endowment payouts without applying MVAs - I don't think so.

 

[crockers]

Not sure what you mean by a 100/0 or 90/10 fund sorry.
Standard Life (just to get very specific) can elect to 1. retain its profits for future years ie shore up the company 2. pay them to share holders via dividends or 3. pay them to endowment holders. And guess what is the least important in that list. It is the same total profits that were there before the shareholders came along - the "with profit" policy holders were the "shareholders" before. So there's your answer it should be no surprise to anyone. Imagine if Std Life were to cut the dividends to shareholders and maintain the endowment payouts without applying MVAs - I don't think so.

the ratios I mentioned are what are laid down in the contract. If it is 90/10 the 90% of the profit goes to the policyholders and the 10% to the shareholders to compensate for their capital.
In the case you mentioned there is no way that SL can retain its profit to shore up the company that is an illegal act.

Sorry there is much misunderstanding about with profits and many people just jump on the band wagon that all WP is bad...it is a mechanism not an investment and will differ from company to company.

One need to look at the underlying fund and how that is invested......that will give you a good indication on how it may perform going forward.

Some funds are now all FI to cover liabilties therefore little or no chance for future growth - some still have a good range of asset classes well spread and diversified...

Hope that has helped..

 

[Smiley]

the ratios I mentioned are what are laid down in the contract. If it is 90/10 the 90% of the profit goes to the policyholders and the 10% to the shareholders to compensate for their capital.
In the case you mentioned there is no way that SL can retain its profit to shore up the company that is an illegal act.

Sorry there is much misunderstanding about with profits and many people just jump on the band wagon that all WP is bad...it is a mechanism not an investment and will differ from company to company.

One need to look at the underlying fund and how that is invested......that will give you a good indication on how it may perform going forward.

Some funds are now all FI to cover liabilties therefore little or no chance for future growth - some still have a good range of asset classes well spread and diversified...

Hope that has helped..

Retaining profits in a company is not illegal it is the normal way that companies use their earnings to fund future investments - the alternative is to pay a dividend to the share holders. No company pays all its earnings to shareholders; therefore some profit is retained.
And anyone who signs up to a with profits fund where they hand 10% to a third party must want their head seeing to imho.

 

[crockers]

Retaining profits in a company is not illegal it is the normal way that companies use their earnings to fund future investments - the alternative is to pay a dividend to the share holders. No company pays all its earnings to shareholders; therefore some profit is retained.
And anyone who signs up to a with profits fund where they hand 10% to a third party must want their head seeing to imho.

It is illegal as was stated before -- they can only keep the % as prescribed....as for handing over 10% - that is used for marketing etc not all going to shareholders - it is also used to seed other ventures that can equally help withprofit holders. But I agree - and I wouldnt buy a withprofit policy - not because I dont believe in the process but because I hate the opaque nature and "socialised" investing,,,,

 

[maddog]

Not entirely true...February we had our annual statement from Friends Provident....with one year to go to maturity. I calculated that one years premiums + the interest paid on the surrender value (if cashed in and paid off the mortgate) would be more than I could expect with 7% growth.

So I called up for a surrender value and forms - filled them in and sent them off. SUrprise surprise I got a call saying the surrender value was now £1500 less than quoted. When asked why - the answer was - you have now passed the anniversary date (this had happened on the sunday - my forms posted on the friday) and we have reduced bonuses.

To cut a long story short I politely wrote to them explaining that the forms were sent and dated in the right year...They replied - saying that in this case they would honour their original surrender value....

In hindsight if we had left this to go to maturity - we would be one years premiums worse off £1500 reduced bonuses worse off and any reduction applied do to the current market - most likely no terminal bonuses being paid..so in this case it made massive sense to surrender when we did..

We were 10 years off finishing our mortgage but at the beginning of this year following numerous letters from our bank RBS informing us of the potential shortfall in our policies we decided to cash in our endowments and pay a chunk off the mortgage which had been changed to repayment some time back

I'm sooo glad we did , even though they hadnt performed well we would be a lot worse off if we had to do the same now.

 

[Birdman]

I well remember some thirty years ago that a colleague - we were both professional economists - to whom I had turned for advice on the best type of mortgage to take on (repayment or 'with profit') remarking to me that a with profit endowment policy would only fail to meet the minimum repayment on the mortgage in the event that (I quote) "there's a general, across-the-board failure of the financial system".

It did. And how right he was.

On the other hand, he was in his spare time (which later proved to be very full-time) a - you've guessed - financial advisor.

I think he's quite well off now. But friendless.

Ah well...

 

[crockers]

We were 10 years off finishing our mortgage but at the beginning of this year following numerous letters from our bank RBS informing us of the potential shortfall in our policies we decided to cash in our endowments and pay a chunk off the mortgage which had been changed to repayment some time back

I'm sooo glad we did , even though they hadnt performed well we would be a lot worse off if we had to do the same now.

A good move....but also depends with which company you took out your endowment policy ...BUT I bet it was a LOW cost endowment -- ever wondered why it is called this?..

 

[crammy69]

Just to bring things to a close, I received the money in my account today!

cheers!

 

[grober]

Just to bring things to a close, I received the money in my account today!

cheers!

Good news. Just don't deposit the money in one of these high interest accounts some of the Icelandic banks are offering. I hear they are a bit iffy at the moment!