What Are The Advantages And Disadvantages Of An Endowment Policy?

I was told to get an endowment as we would have a lump sum to buy a car, a holiday or put our kids through university. This was not a maybe we were told we would have it. What actually occurred is that the endowment now has a £10,000 shortfall and we have had to increase our mortgage for it to end on time.  I would never do it again, be very carefull.

Endowment policies can have advantages and disadvantages for customers. They are primarily used to pay off interest-only mortgages, and feature an investment and a life cover section. It works by paying off your mortgage debt if you die when the policy is active, while potentially granting you the funds to pay off the mortgage if it expires before you die. It therefore has the benefits of providing the money for paying off a mortgage and having residual cash. However, if your investment and policy does not perform, you could be left with mortgage debt, and will only repay the original sum. It might also be useful to purchase additional life cover, especially as the life insurance covered by the endowment policy also expires when the policy does. More information on endowment policies and consumer rights can be found at www.fsa.gov.uk/consumer. Most banks, including Norwich Union will offer this service, while companies also exist that will broker the sale of your endowment policy if you feel that it is no longer appropriate.

Don't do endowment mortgages!