Surrender My Endowment ::

Surrendering your Endowment with Profit Policy Endowment with profit policies or mortgage endowment policies are regarded as long term investment products. These policies run most often for 25 years or more to cover for example a mortgage or simply to provide some savings. These policies are designed to be kept until maturity date.

Personal circumstances tend to change over the years and a large proportion of endowment policies do not reach maturity, because they are either surrendered to the life company or traded on by the original policy holder. Policies are mainly sold for personal reasons, like change of mortgage, divorce, debt settlement, raising capital etc.

Life companies are often accused of offering poor returns when policies are surrendered, especially during the early stages of a policy term. However, it has to be born in mind, that Life Companies will have to provide life assurance cover from day one. They also have to recover the often substantial set-up costs, and have to fulfil their obligation to give existing clients the best possible return and therefore want to award those policyholders who keep their contract for the full term, as originally planned.

Endowment with policies do not grow linear. Premiums in early years are being used to cover setup and administration cost as well as the cost for life assurance cover. It is only in later years that a large proportion of premiums are used for actual savings. Endowment with profit policies are also designed to attract a terminal bonus. Although not guaranteed, the amount of a terminal bonus can be quite substantial and can be as much as 50% of the total maturity value. Surrendering an endowment with profit police will not only attract surrender penalties, you will also lose the terminal bonus and your life assurance cover.

Especially during the last few years endowment with profit policies have gained the reputation of being a bad investments. Lower as expected returns, largely due to declining stock markets, has forced life companies to adjust their investment strategy accordingly. Reprojection letters sent to their clients very often show a bleak picture and illustrate, that in many cases target amounts are unlikely to be achieved. It should be born in mind, though, that although life companies generally use the same projection figures of 4%, 6% und 8% the basis of that calculation can vary largely from one company to the next.

Surrender comparison.
The table below illustrates the change of surrender values from 2007 to 2008. The surrender values in 2008 includes premium payments from May 07 to May 08.

Life Company	Start Date	Maturity Date	Basic Sum Assured	Premium	Surrender Value  May 2007	Surrender Value   May 2008
Pudential	01-Jan-96	01-Jan-11	£10,970	£509.44 Y	£23,502	£25,273
General Accid.	14-Sep-87	14-Sep-12	£16,415	£826.15 Y	£28,188	£31,142
Royal Life	07-Aug-87	07-Aug-12	£17,901	£862.76 Y	£31,215	£33,505
Sun Alliance	06-Sep-89	06-Sep-10	£16,045	£103.15 M	£15,179	£16,045
Royal London	01-May-93	01-May-14	£10,680	£54.60 M	£8,997	£10,189
Co-Op	01-Jul-89	01-Jul-14	£12,870	£47.10 M	£14,927	£15,891
Brittanic Ass.	01-Oct-89	01-Oct-14	£10,289	£38.00 M	£13,010	£15,851

However, make sure you have taken professional advice and know all the facts first before you surrender or sell your endowment policy. Also bear in mind, that by discontinuing your policy you will lose your life assurance cover.