Should I surrender my Prudential Endowment plan?

Hi anon,

I think you mean PruWealth II, based on the tags in your question.

I would caution you against comparing endowments vs ETF/stocks. The upside of ETFs and stocks are that it offers potentially higher returns but it can also give you the losses of the market since that is how they work.

Endowment plans are a hedge against that volatility of investments and thus cannot be treated or considered in the same manner. This is the same as comparing FD against an ETF. We don't see too many people say that they want to break their FD to invest in an ETF, as they are different asset classes build for different purposes.

As others have mentioned, there are pros and cons of an endowment, but the same can be said for any other asset class.

I'd recommend you speak to an advisor to decide on the next step. One likely option available to you is to reduce the sum assured so that you only lose out on part the premiums paid for the first 2 years, and free up your cash flow.

Nowadays, there are so many questions regarding whether to go for early surrender of endowment policies. Everyone has their own way of investing, just like their appetite. Logically speaking, yes you can definitely achieve so much higher returns than your projected endowment plans if you were to put the funds into some low cost index etfs for eg 20years. But before you cancel it, consider looking from a bigger view.

Pros
-forced savings so you won't anyhow spend on other wants
-capital guaranteed w bonus(depends) whether economy good or not if till maturity/death
-not much volatility

Cons
-locked for 20yrs with early surrender charges
-slow growth since its not an investment but a form of savings.

To sum up, if you surrender the plan, you have to be even more consistent in investing in order to make it work. There will be times where you think you have additional 4k to spend on and you don't want to end up thinking i should have stuck with the plan.

If you don't surrender, you can consider doing more side jobs to get additional income to invest. In this way, you will have best of both worlds. Investment should be a little balance of different instruments here and there. Give a few days and ask yourself since its your money, whatever you choose, there's always something to be learned.