Endowment

Cashing in some or all of your endowment plan

If you’re considering accessing some or all of the cash in your plan, we’ll be happy to help. It’s important to note that once you’ve told us what you’ve decided to do, you can’t change your mind. Please be sure you understand all your options, and the effect of any changes you make. There are a few things you and any other plan owner should think about before you make any decisions.

If you have any questions once you’ve read this summary, or need any help understanding your options - just call us on 0345 640 1000 or +44 178 644 8844 if you’re calling from abroad.

How an endowment plan works

An endowment plan is a long-term savings and investment plan with life insurance. You pay a premium for an agreed period and receive a lump sum at the end of that time. If you die before then, we pay a guaranteed minimum amount, called a sum assured.

Endowments were often used to help repay mortgages or other debts and as long-term savings and investment plans with life insurance.

Your options

These vary depending on your plan type and the benefits you’ve chosen. We can explain the options to you if you get in touch. As a guide, these could include:

  • Fully cashing in your plan.
  • Cashing in part of your plan.
  • Selling your plan on the second-hand endowment market.

Alternatives could be taking a payment break and making up payments afterwards, making your plan paid up where you stop making payments, but don’t cash it in or changing your payments.

How your options could affect your plan

The effect of any changes you make will depend on your individual plan and benefits, so it’s vital to make sure you’re making the right decision before you take any action. Possible effects could  include:

  • An impact on your ability to repay your mortgage or other debt.
  • Reduced or lost life cover and benefits, which could be harder and more expensive to replace, particularly if your health has deteriorated.
  • If you cash in a plan which is invested in the With-Profits Fund this may result in a market value reduction which can reduce the value of any withdrawals taken from the fund.
  • A change in tax status of the plan, which might mean paying more tax in the future.
  • A change to charges, or additional charges, to your plan.
  • If you’re invested in one of the PruFund protected funds any cash in will reduce your guaranteed amount.
  • You might get back less than you paid in because plans are designed to pay out over the full term. Cashing in early, together with changing investment values can affect the value.

Some plans include a guaranteed annuity option. This provides a guaranteed lifetime income as an alternative to the maturity proceeds and is only available at the maturity date. This option won't be available if your plan is cashed-in early.

You could also sell your plan on the ‘second-hand’ endowment market and we can let you know if this is possible when you call. Not all plans are suitable, for those that are this means:

  • You could get more than you would from cashing in by finding the best price for your plan but you’ll lose all benefits, including life insurance. You may have a tax liability.
  • After the sale the plan belongs to the new owner and all of the benefits will go to them.

Protecting yourself from investment scams

According to Action Fraud, the UK’s fraud and internet crime reporting centre, an estimated £1.2bn is lost to investment scams every year. So if you’re thinking of reinvesting the money from your plan, take a minute to find out how to stay ahead of the scammers

What to do now

Give us a call on 0345 640 1000 or +44 178 644 8844 if you’re calling from abroad. 

We can’t give you advice or make your decision for you, but we’ll be happy to help you understand your plan and talk you through all your available options and their possible implications.

Alternatively, speak with a financial adviser - if you don’t have one, you can get details of financial advisers in your area from www.pru.co.uk and selecting ‘contact a financial adviser’. Financial advisers will charge you a fee for any advice they give you, but it will be personal to you.

We’re here 8am - 6pm Monday to Friday and happy to help in any way we can. Please make sure you have your plan number to hand when you call.