I have recently received a rather upsetting letter from my endowment provider informing me of a "potential" shortfall in my maturity value.
I contacted L&G directly on a dedicated helpline and was told they could not actually give me advice but could only give me factual information. Whilst very friendly, I felt I needed more information.
He gave me a good account of the reasons behind the potential shortfall.
TRUE, due to recent market conditions, expected investment returns are likely to be lower than those achieved historically. TRUE, the rates used for the projections at the time were fairly ambitious in light of current market conditions. TRUE, the adviser that sold me the policy did earn a lot of commission. FALSE, my policy is a bad one. The Insurance Companies at the time were told by their regulator what projection rates to use. They have also been ordered to re-project using lower rates. FALSE, the values I have recently been quoted are accurate. I have a with profits policy which has a sizable "Terminal Bonus". The is a bonus that becomes payable on maturity but can't be considered guaranteed. Therefore it can't be included in the recent projections I received. TRUE, the policy should not be surrendered immediately. The policy still provides me with valuable life cover which will pay off the entire mortgage if I were to die. Also, there is a flourishing second-hand endowment market where I could receive substantially more than my quoted surrender value. If this is the case, why would someone pay me more for it?
Basically, I have been paying less for my endowment mortgage than I would have paid for a repayment one. I now know well in advance that there may be a problem. I actually have decided to save separately into an ISA.
Moral of the story is don't be tempted into a knee jerk reaction because of what you might read in the press or what the bloke down the pub may say. Take professional advice and make an informed decision.
I sleep well at night.
How helpful would this review be to a person making a buying decision? Rating guidelines
This is in the life insurance category which is off topic as you hav writen about endowmenrts
Ladywell1 14.09.2002 00:05
Hi good first op. I prefer a repayment mortage myself. But do feel that given the right and correct information it is up to the individual. Also I do feel that you could have added more information, something to think about when doing your next op. Thanks Jenn.
shewhosmiles 13.09.2002 22:21
My insurance company told me there would be a shortfall too, I think it's pretty general because of the market conditions.
Sep 13th, 2002
very helpful by (25%):
helpful by (67%):
off topic by (8%):
