Scottish Provident Endowment - Cash in or keep?

I'm interested in getting general feedback from m'learned friends here on AAM regarding endowments in general & Scot Prov one's in particular.

I have a Scot Prov with profits endowment taken out 1993, matures in 2011. Death benefit is 65k, basic sum assured is 29.5k. Bonus to date 10k. Monthly premium 167. Latest projected maturity value is 51.4k @ 4% and 55k @ 5.6% growth.

Scot Prov have declared no annual bonuses for the last 5 years. My understanding is the fund is closed and it would appear they have little interest in their Irish customers.

Should I keep this policy and hope that annual bonuses are re-instated and/or hope for a generous terminal bonus? Would I be better to liquidate this policy and re-invest proceeds?

Any and all opinions welcomed.

Is this actually a mortgage (i.e. endowment mortgage) question or should it be in another forum?

despite not having annual bonuses is the terminal bonus increasing all the time ? Are they increasing the cash in value offer ? When you ask them how much they will give you for it , is this value increasing ? This might tell you whether its worth keeping or not.


You might be able to sell your endowment to a third party for more than the cash in value you would get from the insurance company.

See this thread

http://www.askaboutmoney.com/showthread.php?t=6792

Usually the options with endowment policies are some or all of the following:

• Keep investing
• Stop contributing but hold it until maturity
• Cash it in (may involve penalties or loss of maturity bonuses)
• Sell it on

Knowledge of the charges applicable to the policy is one key issue in making any decision.

When the endowment is linked to a mortgage then it can sometimes make sense to replace the endowment mortgage with an annuity one regardless of what you choose to do with the endowment policy.

Knowledge of the charges applicable to the policy is one key issue in making any decision.

Click to expand...

If it's a Conventional With Profits endowment policy (the older style) it's practically impossible to get an indication of the charges being levied against each policy. Charges are contained within the fund only and are not expressed at policy level.

Thank you all for your comments.

SIGN - The terminal bonus has not been increased whatsoever. I only have one surrender value so not sure if cash value is increasing. The end maturity value has increased by circa 8% from 2005.

I'm aware of the options I have and was hoping for more specific comments regarding Scottish Provident and the the likelihood of them achieving the investment returns I need in order to receive the original maturity value.

Has anyone had (or does anyone know of) a Scot Prov policy mature recently and received (or got close to) their original mortgage amount? Was a terminal bonus paid and if so what % was this of the total value?

Folks,

This is an appropiate question since historically the Scottish Provident with profits policies (now relabelled since demutualisation as Traditional with Profits Life Policies) have been an excellent investment with annual bonus and terminal bonus being paid throughout. This made theses policies very attractive for the many Irish holders who did not have access to other investment vehicles to provide for their old age and or need for periodic funds to meet domestic and or family needs. Indeed the policies were structured in modules to allow for such periodic / partial encashment, while allowing the remainder to remain and continue to accru bonuses.

It was the availability of the annual bonus that gave the policy its growth and encashment value since these bonuses were defined and fixed so as to become part of the calculation in the terminal bonus.

By failing to declare any annual bonus recently and now saying they are ending the practice has serious implications for the value of the policy and has in fact seriously erroded the encashment value and the trade in value of the policy since these are directly linked to it value both now and at maturity. (Since there is nothing accrued for the terminal bonus to be calculated against.)

I can only speculate that since the Irish policy holders (about 200,000) are now reaching matutity over the next 10- 15 years the Scottish Provident here is aware of the heavy burden due to these policy holders and that it has not made sufficient provision to meet this liability should annual bonus at historic rates continue to accrue. The company's recent statements actually defy logic on this point saying this is just a re-balancing exercise.

Suggest that you make a formal complaint their Complaints Executive and then onwards to the Financial Ombudsman and to the Financial Regulator. (Sorry, but this is how these investigations have to be initiated. it is worth the fight though since the policies were sold on the basis of both annual bonuses and terminan bonus.)

Otherwise I am afraid that like many vulnerable people who are relying on these funds to provide for their golden years you are going to be disapointed at the outturn of your investment.

Traveller

first of all i agree with traveler,you should make an oficial complaint,i did so with a seperate company and was compinsated.
with regard to s.p.i've given up on them there going no where even brokers and advisers will say dont touch them,having said that i had a lot longer to run with my policy and felt i could makeup the loss elsewhere.so if i where you i'd stick it out for the sake of 3 years,you'll not get the return you planned (see travlers message)but you will get a better return than if you take it out and put it elsewhere,with the penalties they hit you with and no terminal bonus,of course this is just my opinion,hold tough.
yob

Have a look at this post for a sample maturity from SP last year http://www.askaboutmoney.com/showthread.php?t=30826&highlight=Scottish+Provident

The company were difficult to deal with but that has changed since Resolutions took over the administration.

I would not recommend that anyone cash in any endowment policy prior to the original agreed maturity date. I have seen other maturities from SP over the last couple of years and the returns would put other with profit offices in the shade.

Perhaps it is specifically because of the early encashments, that is making the pot bigger for those that remain loyal to the original contract term (?)

If it was my policy, I would continue to pay the premium and take my chances as opposed to cashing it in or selling it. My opinion.

Once again, thank you all for your replies & advice/opinions.

Yob, was your subject of complaint based on an endowment policy sold to you by an Irish company/broker? If so I 'd be interest in hearing more from you as I'm sure lots of other readers would.

thanks

just a quick note yes it was,equitable life by there own sales team,there own internal investigation found in my favour as the people who should,did know the company was already bust and it was just a matter of time,and they shouldn't have continued there sales .they made anoffer i fought my corner and got a little extra.
on your existing policy itoo have one coming out in 2011,its not even up for consideration to cash in at this late stage the hard work is already done!!its a different company but all with profits are in the same boat.