Royal & Sun Alliance are apparently planning to pay out compensation on mis-sold endowments early, rather than wait until later for potentially larger claims.
The compensation is calculated by paying out the difference betwee the current projected shortfall at maturity and what people would have paid off under a repayment mortgage. It is also possible for a lot of people with with profits policies to sell them to a second hand endowment trader for more than the surrender value. Add this to the compensation and you really have a chance to sort your mortgage problems out. But, one word of warning - don't forget that your endowment has valuable life insurance built in which you may need to replace.
Our View
Royal & Sun Alliance has a good business argument for taking the compensation hit on the chin now, especially for with profits policies. With profits policies are not generally returning anything like 4%, 6% or 8% and each year that low bonuses are paid, shortfalls increase.
We believe that if you are offered compensation you should not spend the money elsewhere but sort your mortgage problems out with it. The easiest solution to make sure your mortgage will be repaid is to switch to a repayment mortgage and make the payments when they fall due. That way, there will be no question about having a shortfall.
Get a quote to sell your endowment now.Get a quote to replace your life cover now.