Endowment Policies Policy

 We are considering surrendering our endowment policy and using the money (currently £12,181) to pay off a small chunk of the mortgage. We will use the £83 a month saved on the premium to overpay on the balance. Norwich Union says it is ‘proposing a re-organisation/reattribution of its funds’ which may make some policyholders eligible for a payout, though this is unlikely to be before the end of 2008.

We have no idea whether our policy might fit their criteria nor if such a ‘reattribution‘ might increase the surrender value, the final projected policy payout or both. M. C-B., Haslemere, Surrey.

Margaret Stone, the Daily Mail’s Money Doctor replies: In normal circumstances, I would say that your plan to surrender your Norwich Union policy, reduce your mortgage debt and make larger payments on the balance in order to be shot of it sooner, was absolutely the right thing to do. But times are not normal for NU policyholders.

The proposed reattribution of the £5.2 billion gross surplus to requirements in its with-profits funds should result in a cash payment to qualifying policy-holders. The payment was scheduled for early next year, but is now unlikely to be before summer 2008.

Though it has been broadly established which policyholders will qualify - and as a holder of a former Commercial Union policy you almost certainly will - the final list is still not available.

However, it is not a done deal. NU and the independent Policyholder Advocate who, at the Government’s insistence, is appointed to look after policyholders’ interests, are negotiating how much of this £5.2 billion the policyholders should get and how much goes to NU shareholders.

The Policyholder Advocate, Clare Spottiswoode, is hoping to achieve a significantly greater share for NU policyholders. So where does this leave you?

You are in line for a cash lump sum, likely to be tax-free, which you would sacrifice on surrender. The reattribution prospect has no bearing on the current surrender value of your policy (although wobbles in stock markets might), nor should it impact on the projected maturity value.

 

About endowment mortgages

Many people have complained about the potential shortfalls in the performance of their endowment. Initially you should always complain to your endowment company who will look into your complaint for you, provided that you purchased it after 29th April 1988. If you are still unhappy you can refer your complaint to the Financial Ombudsman Service.

• You may wish us to become involved on your behalf if;
• Your claim exceeds £100,000 (which is over the FOS limit).
• You purchased the policy before 29 April 1988.
• The adviser is no longer regulated by the Financial Services Authority.
• You are unhappy with the Ombudsman’s decision.
• Your complaint is taking too long to resolve.

 

 The article is a mashup of informations from the following finance blogs:

Endowment Policy - Endowment Mortgages - Sell Endowment Policy - Sell Endowment Policy Info - Sell Endowment Policy Insurance - Endowment Policy Journal