Hi there anyone got any info about endowment policies. has anyone sold or cashed theirs in before. Ours is not going to meet the target now so we want to get rid of it. Any suggestions?

Debsy,
We are in a similar situation.

One things for sure if you cash in early you will lose a lot. I suspect selling it would be better but still not a good deal.

Ours are also going to fall a few thousand short so what we are hoping to do is sell up, pay off the mortgage but retain the endowments as straightforward termed life insurance policies.

Don't know if that is possible yet as would mean insuring people who live in another country and paying in from OZ but hope so. That would be our retirement nestegg.

Bix
I had thought of that but then I read about it being taxed:scared: Need some expert like Alan Collett to answer this one.....

It's worth remembering the tax implications. It will be classed as income if you receive it in Oz and I don't know how much tax you will be liable for

mmm, just as I thought

Hi Debs,

We tried to sell our two but nobody was interested
We've surrendered them and paid the proceeds off our mortgage - we've also increased our mortgage payments by the amount that we were paying in premiums. It's very satisfying seeing the mortgage come down so quickly - certainly a lot better than getting the statements from the endowment companies abut the shortfalls

Your options are 1. Surrender to Life Company - this is always at some loss and usually gets you the least cash.

2. Trade it in to a company that generally offers more than option 1 although they dont always want all types of policy.

3. Keep as savings plan until maturity if allowed to fund from either England or Oz.

If its covering a mortgage in UK then you can put part of mortgage to repayment in order to reduce reliance of mortgage upon endowment.

selling an endowment if of a certain type can be done by searching for TRADED ENDOWMENT PLANS on internet or TEPS as they are sometimes called. Many many companies will now buy up endowments, although you still make a loss from the end figure. Remember the quotes you have been sent may still differ from the sum you actually receive. SO shortfall could be less or more.

Each option really does depend on your own situation

Hope this helps

A warning here.
If you keep endowment policies in the Uk any growth in any year will be taxed as income.
You can end up paying more in tax than you would lose by selling or surrendering them.You may also be liable to CGT on maturity.
This is one area where you need expert advice.

G

Would you also pay CGT in New Zealand?

The other option would be to convert the endowment to “fully paid up� effectively freezing your contributions. This would preserve what you have in there without having to contribute further.

Plus points – 1) No further payments required in local currency 2) Worth more than if you cash it in 3) Potential gain if the equity markets improve

Minus Points – 1) Have to declare increase in value on Oz tax return, 2) Exposed to currency fluctuation on maturity 3) No life assurance cover 4) No terminal bonus? (not sure about that one!)

Don't think you are correct here. They cannot tax you annually on the capital growth AND then clobber you again for CGT on maturity as you have already paid the tax on the capital gain each year.
I do believe they will tax you on the annual growth of the endowment but then they won't tax you at maturity as you've already paid the tax.

No CGT tax in NZ so you are laughing.

Sorry
You are right.
You are taxed on annual growth therefore CGT is not applicable.
One problem is that endowments grow more as they near maturity so you are actually paying a high tax in relation to the total value of the policy.

Good point

G

keep keep keep it dont sell it you will regret it.It will stand you in good stead for the future also keep open your uk bank account and use it for the direct debit just transfer the money over and in a few years time ....bingo all the money is yours and when the exchange is worked out you will be glad you did it because you will have a little nest egg

You will be taxed on any overseas investments including endowments.The groeth is counted as income.
Proper financial advice is needed.
Tax evasion is taken seriously.

G