An insurance analyst has recently released his own data, claiming that 90% of endowment policies will still fall short of their target. Whilst this news is terrible for endowment policyholders relying on their maturity value to repay their mortgages, the news is better than it was last year.
According to the data, the average shortfall last year was around £11,000. This year it is between £8,000 and £9,000.
Our View
If you have an endowment backed mortgage and have not yet looked into it, do it now! Even if you have years to go before your mortgage should be repaid, revisit your endowment policy.
Many policies have relatively high charges and exceptionally poor returns. This means that the money you pay in premiums every month is technically doing nothing to increase the value of your policy. You could find that a repayment mortgage would cost the same as the interest you pay to your mortgage lender, plus the cost of the endowment.
Free Factsheets on Endowment Shortfalls and more ..........