What is an Endowment Policy?
Endowment policies are usually used to pay off interest-only mortgages. There are two parts to the policy; the investment, and life cover. The policy lasts for a set amount of time.

If the policy dies during this time, the mortgage is automatically paid off. If the holder is still alive at the end of the ‘life’ of the policy, it should be worth an amount which is enough to pay off the mortgage; but this is not guaranteed, it depends on how the markets perform.

In recent years, some policy holders have found that their endowment is unlikely to reach the valuation that was predicted when they took out the policy. This leaves them unable to finish paying off the mortgage, and can lead them to have to find other ways to pay off the mortgage. Consequentially Endowment Policies have not been as popular in recent years, with many lenders no longer offering them.

Pros
There is still a chance that your endowment will be worth enough at maturity to pay off your mortgage and some.

Cons
If the policy doesn’t perform as well as expected, it might not pay off the mortgage.

Endowment policies will only repay the assured sum if you die, you may have cause to buy extra life cover to provide for other debts.

When the policy expires, so does your life insurance.
How do I know if my Endowment will pay off my mortgage?
Speak to your endowment provider. If it seems likely that your policy is unlikely to be worth enough to pay off your mortgage at maturity you should speak to an Independent Financial Advisor (IFA). You can find your local IFA at Yell.

For more information you can contact the Financial Services Authority, who are in charge of dealing with complaints about endowment policies. It is also responsible for securing compensation for anyone who thinks they may have been wrongly sold an endowment mortgage.

There are private endowment buyers who are willing to purchase with-profit endowment policies of a certain type. This can recover some of the value of your endowment policy. Patient investors will buy up several small endowment policies and wait for them to mature, something you may be unable to do.

John Mce writes on behalf of AAP. Find out all you need to know about endowment surrender, selling endowments and cashing in policies from the UK largest buyer, AAP.

The main point is whether the financial product in question was really suitable for you at the time, whether you understood the policy you were undertaking and the risks involved. Your complaint should be dealt with seriously if the salesman did not explain that the policy as a share-based investment and that the predicted payout was not guaranteed.

You also have a good case if you were assured that the policy would pay off the mortgage and provide extra, but instead it is falling short, or if you were single when you took out the policy and did not require the life assurance element of the endowment or the salesman failed to make it clear that life assurance was included in the policy.

You also have good grounds for a complaint if your endowment matures after your retirement date and the person who sold you the policy did not point this out, or if they told you that the policy would be worth enough by retirement to pay off the mortgage.

Making a Complaint
The first place to direct your complaint should be the company which sold the endowment to you. If you are not sure whether that was the endowment company itself, your lender or another financial adviser, complain to all of them. You cannot take a complaint of this nature straight to the Financial Ombudsman, you have to complain to the relevant firm first.

State your complaint as clearly as you can, quoting any policy numbers or customer references. Explain what has happened and work chronologically, enclosing copies of any relevant documents, and try to communicate by writing as much as possible since then you have a record of who said what when. If you do speak to anyone on the phone, take down their name and take a note of what was said. Follow up with a letter which confirms your phone conversation.

What Next?
If you feel that your complaint has not been appropriately dealt with after eight weeks of your first contact, you can go directly to the ombudsman. However, some companies are being given longer to deal with complaints because they are so busy. If this is the case you will receive a letter telling you how long you should expect to wait.

If you are offered compensation, enquire about how the compensation is calculated, and do not feel pressured into accepting it unless it is an acceptable offer. The compensation should put you in the position you might have been in had you taken out a repayment mortgage.

If you aren’t happy with the company’s response, contact the independent complaints services provided by the Financial Ombudsman. It is free, and if you’re still not happy you can persue your complaint in the courts.

With significant means to buy endowments, aap will value your endowment policy completely free of charge and without obligation.

We shouldn’t be shocked at the current state of Britain’s property market, the same happened in the early 90’s. If you can recall back to the late 80’s everything was peachy in regards to housing, with plenty of property available to buy or sell and the rise of the infamous property developer began. However what goes up must come down and as the crest of the property wave peaked it inevitably came crashing down on all those riding it. This vicious cycle has been repeated over the last 15 years so why is it that victims are surprised by their financial fate? Perhaps the government warnings should have been clearer? There could have been better advice made more available for how to deal with the impending doom and what the public should be doing with their money, other than hysterical consumer spending.

The doom and gloom continues as food and oil prices veer skyward, the cost of bread rising 15% over the past 12 months and the increase of fuel prices have the potential to reach 113 pounds per barrel in a couple of years. The exchange rate is also less than favourable as the pound hits a record low against the euro. So why is the UK’s economy moribund when the remaining G7 nations are looking forward to slow but steady growth? And is there anything the fair citizens of this country can do to claim back the money they were promised during the prosperity 20 years ago?

Presently house prices are falling at 2500 pounds per month and of course with the syndicated credit crunch people are struggling to pay off their soaring mortgages or see any return on their original investment. Panic sweeps through the nation swiftly but we shouldn’t wave the white flag just yet, rather than surrender, sell. It’s a good time for all those with endowment policies to put them into practise before the recession sucks that capital into its black-hole entirely. Given our current predicament it is unlikely your endowment will ever pay off your mortgage, contrary to what you were told when you took the loan out all those years ago. So instead of trading your endowment policy with your insurer, shop around the open market and see if you can’t get a better price. There are some very well established companies out there that will buy and sell your endowment policy. You can verify their reliability by checking they’re a member of APMM and regulated by the Financial Services Authority. Endeavouring down this route may save you tens of thousands of pounds and keep you afloat of repaying your mortgage.

John McE writes articles on a number of subjects including selling endowments for more information visit AAP