Frequently Asked Questions
Mis-selling Claims | Selling Your Policy- What is an Endowment Policy?
- How do I know if I own an Endowment Policy?
- What's been all the fuss over Endowment Policies then?
- I have unwanted endowment. What should I do?
- What services do you offer?
What is an Endowment Policy? back to top
A traditional with-profits endowment policy is a regular savings policy including life insurance. Combining life cover and investment guarantees that a minimum amount, known as 'the sum assured', will be paid after a specified number of years at the maturity date.
Your premiums are invested in a with-profits life fund to achieve steady returns for policyholders. Normally a fund declares an annual reversionary bonus, which cannot be taken away after it has been awarded. In this way, the guarantee of the minimum policy maturity value builds up year by year, consisting of the basic sum assured and the total of annual bonuses awarded.
A terminal bonus is normally added when the policy matures. However, it should be remembered that investment returns cannot be guaranteed.
How do I know if I own an Endowment Policy? back to top
During the eighties and early nineties, endowment mortgages were the popular method of financing a mortgage.If you mortgaged your house through an endowment mortgage then you will have an endowment policy, which probably sits in your filing cabinet or drawer at home.
Some 8 million people in the UK now own an endowment policy, it is expected that the majority of these policies will fail to pay off the mortgage debt.
What's been all the fuss over Endowment Policies then? back to top
With-profits endowment policies used to be many people's first choice for investment. This was especially true of homebuyers who wanted a reliable way to pay off their mortgage at the end of the term. They paid the interest and set up an endowment policy with a projected maturity value that would clear the debt after 25 years or sooner. Moreover, in the 1980s many found that not only would the endowment policy pay off the mortgage, it would also provide a surplus that could be re-invested or used to generate extra income in retirement.
It would also give peace of mind, as all endowment policies include life insurance that would repay the mortgage in the event of death before the end of the mortgage term. By 1993, endowments had become so popular that 64% of all mortgage holders took one out, according to figures from the Council of Mortgage Lenders.
But all that has changed in recent years. Warnings of shortfalls in maturity values and fears of endowment mis-selling by salespeople looking to earn commission have made endowments far less popular. Last year, only 4% of homebuyers chose an endowment. The majority instead chose a repayment mortgage.
I have unwanted endowment. What should I do? back to top
If you have an unwanted endowment policy and need to raise money, you could try to sell your policy on the second-hand market - this is where we come in, we specialise in traded endowment policies (TEPs).
We offer a comprehensive service for those either wishing to sell their endowment policy and/or claim redress for endowment mis-selling. Even if you have sold or surrendered the policy or the policy term has now expired and you have been paid up, you probably still have a valid claim.