Endowments
Your policy - Hero or Zero?
Low Cost endowment policies connected to mortgages were very popular for several years during the 1980s and 1990s.
Sadly, a few years of poor stock market performance meant that many endowments are now at risk of not returning their target amount when they mature. Some With Profits policies are still paying very low bonus rates, even though the UK stock market has performed strongly for the last couple of years.
The endowment problem has been well publicised, and most endowment holders are aware that there is a problem. Some have taken action – either switching their mortgage to a repayment basis or making additional savings.
However, there are still hundreds of thousands of policies in force. Many of these are now just kept on as savings plans, as they are not linked to a mortgage. A more modern savings contract could give you lower charges and better prospective returns.
Should I keep my endowment?
This is a question we have heard many times over the last few years.
It is one that cannot be answered without careful consideration. Some of the factors to consider include:
- Remaining term & future premiums due
- Current surrender value
- Possibility of sale to a third party at a premium
- Cost and availability of replacement life cover
- Current bonus rate
- Potential for future growth
- Possibility of terminal bonus
- Possibility of other bonuses (loyalty bonus, distribution of orphan assets, demutualisation windfall)
The good news is that we can look into your policy or policies for you and provide a report which recommends a course of action for you, whether or not your policy is still linked to a mortgage.
If your policy is worth keeping, we will tell you so, and explain why.
If not, we will tell you the most suitable course of action.
We can also arrange replacement life cover, or new cover (level term assurance, mortgage protection, or critical illness cover). Because we are independent, we will look at the whole market to find the best deal for you.
