Trading Second Hand Endowment Policies
What is the Maturity Value?
The maturity value is the figure the policy will pay at maturity provided the current reversionary and terminal bonus rates remain unchanged from now to the maturity date.
The Reversionary Bonus Rate is the figure that is used to calculate the annual bonus that is added to the policy. When added to the policy it cannot be taken away.
The Terminal Bonus Rate is the figure that is used to calculate the final bonus at maturity. This figure is not guaranteed and is payable only at maturity.
The maturity value will improve if the bonus rates rise - it will decrease if the bonus rates fall.
To see the effect of the movement in bonus rates Click Here
The maturity value is shown on our sales list for all policies maturing within 5 years, thereafter we are not permitted by the Regulators to show this figure. However we will be pleased to provide these figures upon request, either e-mail sales@a1policy.com or call +44 (0) 1582 881296 and quote our reference number.
Alternatively the basic method of manual calculation is shown below, it is rather slow and tedious and there are some individual quirks dependant upon the particular insurance company selected.
| 1 | First note the bonus rates shown on the sales list for the policy to be calculated. |
| 2 | Multiply the Bonus Attached figure by the Attaching Bonus percentage. |
| 3 | Multiply the Basic Sum Assured figure by the Sum Assured percentage. |
| 4 |
Add the results from 2 & 3 to the Bonus Attached figure, this gives you the Total Attachment figure for the next year. |
| 5 | Repeat this process until you arrive at the commencement of the year the policy is to mature. |
| 6 | There may be a part year bonus for the remainder of the term, if you wish to check this e-mail sales@a1policy.com |
| 7 | On the assumption that there is a part year bonus and the policy matures on the 1st June take 5/12ths of the Attaching Bonus percentage and 5/12ths of the Sum Assured percentage and add these to the existing Total Bonus Attached. Now you have the final attaching bonus at maturity. |
| 8 | To calculate the final maturity value. |
| 9 | Take the Basic Sum Assured and multiply by the Terminal Bonus percentage (if applicable) |
| 10 | Take the final Attaching Bonus figure and multiply by the Terminal Bonus percentage (if applicable). |
| 11 | Now add the following: |
| 12 | The Basic Sum Assured |
| 13 | The Total Attaching Bonus - either the result of 5 or 7. |
| 14 | The figures (if applicable) from 9 and 10. |
Alternatively just ask and we will be pleased to give you the calculated figure upon request.