Don't Do It !! (General Comments)

Member Name: johnt

Product:	General Comments
Date:	08/09/00 (362 review reads)
Rating:

Advantages: none with hindsight

Disadvantages: risky investment, high comissions

When we bought our first house in 1990 we took out an endowment policy to repay the mortgage. In the late '80s this was a very popular way to cover your mortgage. The idea was simple, you payed the interest on the loan for 25 years and invested into an endowment policy which would pay off the sum borrowed and hopefully also give you a nice windfall.

These policies were heavily promoted due to the attractive comissions paid out to their salesmen,nearly all your first years premiums went in comission then a portion of subsequent years.

In a very competitive market these were sold on promises of having life cover built in, the inference that the mortgage would be covered together with leaving you a surplus at the end. Many of these policies were mis-sold by comission hungry salesmen.

The truth is that the majority of these policies were based upon unreasonably high rates of return in a bid to keep the monthly premiums as low as possible. These returns are unattainable and have led to the FIS forcing endowment providers to review the returns and write to their customers accordingly.

Our endowment policy will not reach it's target, they have suggested a number of alternatives including increasing the monthly premiums. We shall be reverting to a repayment mortgage as it is the only way to guarantee that our mortgage will be paid off.

There is little recourse for the majority of customers and many will lose money through this. If only we'd been adequately informed of the risks 10 years ago.

Summary: