Royal London Life Assurance Endowment Policy

[aidank]

Back in 1998 I began paying into a 30year Royal Liver Endowment Policy.

I have been paying €1025.95euro into this policy annually.

Thus i have paid €25,394 since 1998 and from the statement it is now worth €48,714.

I remember at the time I was told to expect i could return 4 times my investment over the 30years. Its not going to return even close to that.

Fees appear to be 871 per annum or 871/48714, which is 1.8%.


What questions should i be doing to decide whether i should keep paying this ? or cash it and invest it in a 3% Raisin account.



Its an endowment policy, will I have to pay tax on the gains should I decide to cash it in.

 

[Fortune]

Back in 1998 I began paying into a 30year Royal Liver Endowment Policy.

I have been paying €1025.95euro into this policy annually.

Thus i have paid €25,394 since 1998 and from the statement it is now worth €48,714.

I remember at the time I was told to expect i could return 4 times my investment over the 30years. Its not going to return even close to that.

Fees appear to be 871 per annum or 871/48714, which is 1.8%.


What questions should i be doing to decide whether i should keep paying this ? or cash it and invest it in a 3% Raising account.



Its an endowment policy, will I have to pay tax on the gains should I decide to cash it in.

There'll be no tax to pay, as it's already deducted from within the fund.

As for whether to stick with it, or go to raisin, it's a matter of certainty Vs potential. With raisin you know you'll get 3% less 33% tax. Sticking with the endowment you'll get at least €41,830 or potentially more depending on how the underlying investments perform.

 

[aidank]

There'll be no tax to pay, as it's already deducted from within the fund.

As for whether to stick with it, or go to raisin, it's a matter of certainty Vs potential. With raisin you know you'll get 3% less 33% tax. Sticking with the endowment you'll get at least €41,830 or potentially more depending on how the underlying investments perform.

How would I compare it to any other investment and see if it has been a good investment over the last 25years

Have a nephew just arrived and would like to start something with the intent of passing it on

 

[GSheehy]

You'd really just have to compare it on a like-for-like basis.

Standard Life 25 year savings endowment 2.73% annualised return to 2023.

Can't find the Aviva one at the moment.



If a (reasonably good) managed fund had an AMC of circa 1.8% pa over last 25 years I'd say it might have done circa 4.8% pa.

But the managed fund isn't a fair comparison. It'd be more in the cautiously managed fund style and that would probably be circa 1.5% less pa than the 4.8%.

 

[aidank]

You'd really just have to compare it on a like-for-like basis.

Standard Life 25 year savings endowment 2.73% annualised return to 2023.

Can't find the Aviva one at the moment.



If a (reasonably good) managed fund had an AMC of circa 1.8% pa over last 25 years I'd say it might have done circa 4.8% pa.

But the managed fund isn't a fair comparison. It'd be more in the cautiously managed fund style and that would probably be circa 1.5% less pa than the 4.8%.

your not far off on those figures at all, i make it to have generated 3.3% on average over the last 25years.

Is there a low risk fund on offer which has low fees compared to the 1.8% im currently paying.

 

[GSheehy]

It probably wasn't unusual in 1998 for With Profit policies over 25/30 years to have maturity returns that translated to 8/9/10% pa.

You're probably ahead of average deposit rates (& inflation?) for last 25 years. At this stage (with 5 years to go to maturity) I'd probably just stick with it.

 

[phoenix53]

A by the way is, you also had the benefit of them paying out over 33000 + if you had died on day 1 or on any day since you took out the policy.