Endowment Policies Reviewed
Endowments were a popular mortgage accessory in the 1980s and 1990s. Combining life assurance with investment growth into one package, they were used as a method of repaying a mortgage and were sold on the basis that they cover the mortgage repayment at the end of its term and have some money left over.
Sadly, by 2004, of 8.5m endowments that remained, 6.8m were forecast to fall short of the mortgage they were supposed to pay off.
In an endowment mortgage, the holder does not pay off and of the capital borrowed during the loan's term. The endowment policy is intended to grow throughout the period to provide a lump sum at the end which is at least big enough to repay the loan. The monthly repayments consist of the interest on the mortgage loan and a premium for the endowment policy. But the policy has no guarantee that it will pay off the mortgage capital. The policy does have a life assurance element that will pay off the mortgager should you die.
For more on this story, go to: http://www.ukpersonalloanstore.co.uk/articles/062007/endowment-policies-renewed.html
Selling an endowment policy
When it comes to making a decision on stopping an endowment and surrendering it, it is important to check your policy and make sure there is some value in doing this.
Early redemption can result in making less than you would have if it carried on for its full term, but if you need to have the money, then this may be your only solution.
Of course, continuing to pay money into a poorly performing investment could be throwing good money after bad. As well as surrendering it back to the company who sold it, policyholders also have the option of selling it to a third party.
This can have the added benefit of getting more for your policy than you would if it was sold back to the original issuer.
For more on this story, go to: http://news.bbc.co.uk/1/hi/business/3038462.stm
Trading in your endowment policy
If you have an endowment mortgage and are worried - don't make any hasty decisions. Check the facts first. Never just cash in an investment or savings plan or stop paying in without taking professional advice - you could lose out financially.
With-profit endowment policies are long-term investment products. They are designed to be held through to maturity. If for whatever reason you're thinking of surrendering or cashing in your policy, make sure your endowment company tells you about ALL the options - these include the option of trading the policy in as well as surrendering it, if it has been running for at least five years.
For more information on this subject, please visit te FSA website at http://www.moneymadeclear.fsa.gov.uk/news/trading_in_your_endowment_policy.html
Endowment policy
Endowments are investment schemes that include life assurance.
You pay a monthly premium to an insurer and the policy is intended to grow to a value sufficient to repay your home loan and, possibly, produce a surplus lump sum as well.
However, only a small number of endowments guarantee to repay the mortgage to which they are linked. Since the Financial Services Act was put into place a decade ago, salespeople have been prohibited from basing their forecasts about investment returns on past performance.
For more on this story, go to: http://business.guardian.co.uk/glossary/story/0,,2054943,00.html
When it comes to making a decision on stopping an endowment and surrendering it, it is important to check your policy and make sure there is some value in doing this.
Early redemption can result in making less than you would have if it carried on for its full term, but if you need to have the money, then this may be your only solution.
Of course, continuing to pay money into a poorly performing investment could be throwing good money after bad. As well as surrendering it back to the company who sold it, policyholders also have the option of selling it to a third party.
This can have the added benefit of getting more for your policy than you would if it was sold back to the original issuer.
For more on this story, go to: http://news.bbc.co.uk/1/hi/business/3038462.stm
Trading in your endowment policy
If you have an endowment mortgage and are worried - don't make any hasty decisions. Check the facts first. Never just cash in an investment or savings plan or stop paying in without taking professional advice - you could lose out financially.
With-profit endowment policies are long-term investment products. They are designed to be held through to maturity. If for whatever reason you're thinking of surrendering or cashing in your policy, make sure your endowment company tells you about ALL the options - these include the option of trading the policy in as well as surrendering it, if it has been running for at least five years.
For more information on this subject, please visit te FSA website at http://www.moneymadeclear.fsa.gov.uk/news/trading_in_your_endowment_policy.html
Endowment policy
Endowments are investment schemes that include life assurance.
You pay a monthly premium to an insurer and the policy is intended to grow to a value sufficient to repay your home loan and, possibly, produce a surplus lump sum as well.
However, only a small number of endowments guarantee to repay the mortgage to which they are linked. Since the Financial Services Act was put into place a decade ago, salespeople have been prohibited from basing their forecasts about investment returns on past performance.
For more on this story, go to: http://business.guardian.co.uk/glossary/story/0,,2054943,00.html
Copyright © 2007. Endowment Policies.