Sanlam: To cancel or not to cancel?

[Maverick154]

Hi.

So I have a quick question and I love the brutal honesty of people here. I currently have two Endowment policies with Sanlam about 1 - 2 years old. I am only contributing R250 to them. Now the fees on them as I found out recently are 4.4% and 4.5%, to which my eyes went O.O. Silly me for not asking on the day I took them, but I did not know much back then so alas here I am.

My question is the following, the one has a value of R4320 and I will be charged about R817 to cancel/terminate it, the other one is R2670 and I would pay R701 to cancel/terminate it.

My intention is to take the money and invest it in Coronation or Allan Gray with a much reduced fee, I estimate about 1.6% - 1.8% in total depending on whether I go for the Balanced Funds or not.

Considering the loss I am facing, do you guys think it is worth it to cancel and move? These plans are only for 10 years, then they pay out. Oh and my money is currently invested in the SIM Balanced Fund and the SIM Managed Moderate Solution at Sanlam.

Thanks.

 

[Freshy-ZN]

If you need the money and have to cancel then so be it but if you are cancelling to take what you are left with after penalties and start a new investment with another institution then you are probably making a mistake.

The slightly less fees you will be paying with AG or Coro will in all likelyhood never allow you to recoup your losses. What you need to try figure out is which option will put you in the better position in 7 years or so?

 

[Aghori]

Learn from your mistakes. I would rather wait than pay the termination fee, then look for a better investment option. Best bet is to book an appointment with a investment advisor.

 

[Stokstert]

Just ask Sanlam to convert them to different policy that include Allan Grey and/or Coronation.

 

[ToxicBunny]

Yeah.. see if Sanlam will convert them to something with a lower fee..

If they won't and they're new policies, and you will get a better return from AG or Coronation, then its a no brainer.

 

[Maverick154]

If this was a retirement annuity would that change the nature of the decision? To once again give an illustration, my one RA has a value of R6000 with a cancel/termination fee of R1020, but I have only had it for about 2.5 years. My other RA is a similar situation, R5600 in value but termination fee of R1150, this one is less than a year old. Given that these run to 55 years of age and I think my fees on them are around 2.4 - 2.8% would it be wise to then make this call on them now?

I will also move them to something like Coronation or Allan Gray?

 

[Chevron]

Since they only for 10 years, I'd say just let them go on.

 

[Maverick154]

If you need the money and have to cancel then so be it but if you are cancelling to take what you are left with after penalties and start a new investment with another institution then you are probably making a mistake.

The slightly less fees you will be paying with AG or Coro will in all likelyhood never allow you to recoup your losses. What you need to try figure out is which option will put you in the better position in 7 years or so?

How would I go about calculating that to see if it is worth while?

 

[bruce_the_loon]

Find out if you can reduce or stop the payment completely and let it run to the 10 years. If it can be done without penalty, then that is obviously better.

 

[Freshy-ZN]

How would I go about calculating that to see if it is worth while?

Well as per your first post you estimate a savings of about 2.5% if you were in the AG or Coro funds. Your termination costs were about R800 so in simple terms if you were to terminate and switch you would have to achieve a growth of R800 on your investment to cover the loss you incurred in terminating and only then would you start to 'make a profit'.

 

[Maverick154]

Hi everyone, I posted this question in another thread and wanted some opinions on it.

http://mybroadband.co.za/vb/showthr...-Annuities?p=12488866&viewfull=1#post12488866

Thanks!