I have 7 years left to run on my endowment policy . The payout should be £34k, however, I have received a letter stating that the current value is only £18k. I am paying £83 per month to the endowment company. I have an existing mortgage for £95k, would it be better to cash the policy in now and pay the money off my mortgage?
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It’s a difficult choice, if you cash in now you might not get the full amount because of early surrender penalties. The again, if you keep it, it might not make much more than it’s worth at present. A lot depends on the type of policy you have and the funds it is invested in, plus the strength of the provider. Best bet is to talk to a financial adviser who can analyse the policy for you and fully explain your options. If this is the only means you have of repaying the mortgage, you need to be looking at other options quickly.
Cashing in is rarely a good idea as the firm purchasing the insurance will never give you a fair deal as they have to make money from it. My gut feeling would be to keep it going. As I understand it the payout is linked to stock market performance and that has recovered recently. Your £83 per month will devalue slowly over the seven years too. I would stick with it.