How to put a value on your policy ENDOWMENTS
Saturday 25 March 1995
For millions of savers, those home purchase-linked endowments are already likely to constitute the largest investment they have made other than into their pensions.
Getting the best price at surrender, or when the policy is sold to another investor, is important. Similarly, buyers of second-hand endowments also need a guide to good value.
Kingfisher Asset Management, a fund management firm, this week published a guide to the policies provided by 35 insurance companies. It compares surrender values of 25-year policies at various stages and the terminal bonus content of maturing policies.
The value of each company's £50 a month, 25-year endowment policy, surrendered after 10, 15 and 20 years, is expressed as a percentage of the current maturity value of 10, 15 and 20 year policies with the same monthly premium.
The lower the surrender value as a percentage of current maturity value, the greater the scope for trading in the mid-term market.
Similarly, policies with high surrender values have limited appeal to buyers who would see any profit on maturity eaten away by dealing charges.
Companies which pay generous 20-year surrender values compared to 20- year maturity payouts include Prudential, Equitable Life, London Life, Commercial Union, Standard Life, London and Manchester, Eagle Star and Sun Alliance. Much the same names crop up over 10 and 15 years.
"What makes a policy popular is the difference between expected payout at maturity, which may not always be great, compared to the percentage surrender level, especially if that amount is much less," said Ned Cazalet, Kingfisher managing director and author of the guide.
Linked to this is the terminal bonus content of a maturing endowment policy. There may be a connection between terminal bonus at maturity and payout on surrender. The higher a terminal bonus, the less one may receive at early surrender.
There are exceptions to this. Standard Life pays out large proportion at surrender relative to maturity, but its terminal bonus also forms a high proportion of the final maturity value.
The tables give an indication of how worthwhile it may be to keep paying premiums into a policy. For example, if the terminal bonus is 61 per cent of the entire maturity proceeds, as with Sun Life of Canada, or 59 per cent for Pearl or Standard Life, it makes sense to stick with the policy where possible.
"Policyholders can work out roughly whether a particular policy is worth keeping to maturity, selling or surrendering," Mr Cazalet said.
Terminal bonus content of Surrender value
maturing endowment generosity* - 1994
policy (%) 1994
Office 10 Yr 15 Yr 20 Yr 25 Yr 10 Yr 15 Yr 20 Yr
AXA Equity & Law 21 43 55 61 69 66 83
Britannia Life 12 31 46 n/a 80 76 78
Britannic 15 35 51 56 69 71 77
CIS 29 46 60 65
Clerical Medical 18 39 48 56 67 73 82
Commercial Union 17 17 19 29 70 77 84
Co-operative 69 65 76
Eagle Star 14 25 32 37 83 85 82
Equitable Life 29 45 51 54 94 91 92
Friends Provident 24 38 48 55 74 71 76
General Accident 21 32 47 51 64 67 72
Guardian 0 18 41 49 75 67 74
Legal and General 18 26 37 47 75 76 83
London and Manchester 13 28 40 48 85 90 91
London Life 11 25 40 50 79 83 95
MGM nd nd nd nd nd nd nd
National Mutual 21 37 48 57 66 69 79
Norwich Union 24 33 38 41 76 78 81
NPI 18 30 44 55 81 80 77
Pearl 22 35 52 59 69 65 69
Provident Mutual 21 33 42 50 69 65 69
Prudential 17 33 42 50 84 85 88
Refuge 20 35 52 58 61 51 52
Royal Life 11 22 45 48 74 69 50
Royal London 31 42 49 51 68 66 75
Scottish Amicable 19 37 48 57 70 65 72
Scottish Equitable nd nd nd nd nd nd nd
Scottish Life 17 29 50 57 67 66 76
Scottish Mutual 22 40 51 59 70 57 46
Scottish Provident 18 32 42 51 80 77 78
Scottish Widows 23 38 49 51 77 87 81
Standard Life 19 38 50 59 81 79 86
Sun Alliance 20 32 39 49 84 86 92
Sun Life 20 31 40 57 70 69 74
Sun Life of Canada 23 35 55 61 72 76 72
Wesleyan 21 40 56 63 65 57 54
High 31 46 60 65 94 91 95
Low 0 17 19 29 61 51 46
Average 19 33 46 53 74 73 76
* Surrender value of a 25-year endowment policy after 10, 15, 20 years, as a percentage of the payout achieved on a policy with the same premium maturing after the same durations.
Buyers beware of new-build home headaches
Are you ready for pensions reforms?
Dirty tricks in a divorce can cause some nasty surprises
Simon Read: Frozen in time - the expat British pensioners who deserve a better deal
Number of serially under-performing investment funds has increased by a fifth, survey reveals
- 2 Man who held up 'hire me' sign at Waterloo station returns a year later with 'I'm hiring' sign
Nigel Farage: NHS might have to be replaced by private health insurance
'We would evict Queen from Buckingham Palace and allocate her council house,' say Greens
French court convicts three over homophobic tweets, in case hailed as a 'significant victory' by LGBT rights campaigners
British Muslim school children suffering a backlash of abuse following Paris attacks
George Galloway condemns 'racist, Islamophobic, hypocritical rag' Charlie Hebdo at freedom of speech rally
Islamic history is full of free thinkers - but recent attempts to suppress critical thought are verging on the absurd
iJobs Money & Business
Negotiable: Recruitment Genius: A Tax Assistant is required to join a leading ...
£16000 - £25000 per annum: Recruitment Genius: This is an exciting opportunity...
£45000 - £47000 per annum + bonus + benefits: Ashdown Group: Java Developer / ...
£35000 - £38000 per annum + Benefits: Ashdown Group: Marketing Manager - Marke...
Day In a Page
Hibernate during winter and make your living during the summer at this busy guesthouse with panoramic sea views, in the village of Lynton
A four-bedroom penthouse next to the Tate with direct views of St Paul's from two floors of luxurious living space
A four-bedroom detached home surrounded by spacious gardens and woodland, close to New Pudsey
An 18th-century, three-bedroom home near Langstone Harbour built from ships beams with vaulted ceilings and wood burning stoves
A five-bedroom semi-detached home with a mix of period and modern features in a popular and convenient location
This five-bedroom red-brick beauty overlooks the village green and sits in just under two acres of land
A three-bedroom villa with self-contained flat, minutes from Lake Windermere
A deceptively spacious, beautifully presented Georgian home with 3000sq ft of living space and five reception rooms
A five-bedroom Victorian home with four receptions, superb gardens and paddock in Pembury
An eight-bedroom house on the south side of the The Green with cinema, wine cellars and summer house
This 17th century beauty is full of rustic cosiness, while the detached home office means you can also run a business
Four exclusive apartments in a Grade II-listed former medical school with 2,275 sq ft of living space and 18ft ceilings
A five-bedroom terraced house on the popular Peterborough Estate, ideally located for both Eel Brook Common and South Park
A state-of-the-art farm-building conversion on the former Cliveden Estate, with 11,420sq ft of internal space, cinema and wine cellar
A three-bedroom, 15th-century cottage with original features in the picturesque village of Sissinghurst
A six-bedroom terraced house with large south-facing roof terrace, cinema room and wine cellar
A new seven-bedroom home built in Queen Anne-style with swimming pool and parkland views in Mortimer
A listed, four-bedroom farmhouse in the rural hamlet of Rushall with detached barn, four acres of gardens and paddocks
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village