Is it time to surrender my Standard Life policy?

Q I have a low cost endowment policy with Standard Life that is no longer linked to a mortgage. It is due to mature in 2007. The present surrender value (?27,300) is nearly ?1,400 more than the guaranteed minimum payout in 2007. If I add the cost of monthly premiums until maturity to that (around ?2,070) I would be ?3,500 better off surrendering it now assuming that the policy doesn't suddenly start performing miraculously.



However, Standard Life is about to demutualise and windfall payouts in the region of ?1,500 to ?1,700 are forecast. Should I surrender now, wait for the windfall, maintain it as a 'paid up policy' or even investigate the traded endowment policy market? Can you please advise?



WDW

A If you surrender the policy now, you will not be eligible to receive a windfall payment. But if you make it a paid up policy then you will qualify for a windfall, since you would still be owner of a with profits policy with the group.

A possible alternative, which might be worth considering, is a special arrangement under which you can "roll-over" the proceeds ( minimum of ?5,000) of a surrendered endowment policy into the Standard Life with-profits bond and still be eligible for a windfall, assuming the demutualization plan is approved at the group's AGM in 2006.

The size of any windfall is pure guesswork at this early stage. Yet to be decided is whether there will be a flat payment, with the same amount paid to all with-profit policyholders or a differential payment that also takes into account the amount of money invested.

Personally I am a bit pessimistic about likely investment performance by the group, while it is in the throes of adjusting to a new philosophy and l suspect the traded endowment policy market will reflect those doubts. Before taking any final decision you should either consult a financial adviser, who will charge you in one way or another. Alternatively Standard Life has a helpline service on 0845 6060100 which will give details of the options available.