Life assurance aspects

Required Reading


Life assurance aspects

An endowment policy is a life assurance vehicle which combines insurance and savings in one package. However, as we have seen, the `low-cost' version normally has a sum assured of about half the value of the loan you have taken out.

This means that, were you to die before you had paid in many premiums, the sum assured would not be sufficient to pay off the loan. So what the life companies have done is to pack into their home-loan low-cost endowment an element of term assurance, to cover the missing bit before the profits have built up to a sufficient sum. You therefore need have no worries on that score. You should, however, remember that, if you do die, the mortgage is only a part of the financial worries that you'll be leaving behind to your widow(er) and dependants. Section 10 gives more details on insurance.

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Past results of endowment policies

Table 13 shows how life companies have coped over the last few years in producing a return to match, or beat, inflation. The 2000s were a pretty horrific decade for investors, whether individual or corporate ones. As you can see, in the years 2010, 2011 and 2012, not even the best company's results were high enough to keep pace with inflation.

Table 13 Past results of endowment policies compared with inflation.

Average annual inflation Net annual yield of highest

Ten-year period ending rate over 10 years 10-year endowment policy . . .... see: Past results of endowment policies

Current Mortgage Offers

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    Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage. The overall cost for comparison is 7.9% APR. The actual rate available will depend upon your circumstances. Ask for a personalised illustration. There will be a fee for mortgage advice. The precise amount will depend upon your circumstances but our average fee is 2.36% of the loan value. We are authorised and regulated by the Financial Services Authority for regulated mortgage and non-investment insurance contracts.