Industry commentators seem to be at odds regarding the continuing endowment crisis. Some believing that the problem will escalate and others that it has peaked and can only get better.
Many endowments maturing at the moment are falling short of their target due to poor investment returns but, others that received better returns in the earlier years seem to be maturing at or slightly above target.
Our View
We believe that the problems with endowments will get worse, before it gets better. For endowments that were taken out in the early 1980's, many have matured or will mature on target or with additional profits. For those endowments taken out in the mid to late 1990's there still could be significant shortfalls upon maturity. This is because investment returns have not been as high as in the 1980's, meaning that poor performance in the past few years will have a worse effect in terms of overall returns.
Many endowments maturing at the moment are not receiving terminal bonuses which has historically made up a significant part of endowment payouts. This could obviously change in the future but endowment holders should not leave it to chance.
Take advice from us on your policy as early as possible.
Get our Fact sheet - Endowment Mortgage - Don't Panic