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Questions about Endowment Mortgages ::

I have an Endowment With-Profits Policy to repay my mortgage – but there is so much adverse publicity about shortfalls.
The Financial Services Authority does NOT recommend you "cash in" your endowment policy or stop payments without taking advice. You should familiarise yourself with the background information of your mortgage and endowment policy. Your policy might for example include valuable life cover which you cannot afford to loose. The FSA has a host of useful information in the endowments section of their website (see link below) for those who are concerned about their mortgage endowments.

My Life Company has sent me a “ re-projection letter” – what does it mean?
If you have an endowment policy which is supposed to pay off your mortgage, then your Life Company should have sent you a “re-projection letter”, which shows you whether your mortgage endowment policy is on track to pay your mortgage off.

There are three different types of re-projection letters: Green, Amber and Red:

Green Letter:
A green letter confirms that a policy needs to grow by no more than 6% annually to keep on track.
Amber Letter:
An amber letter indicates a possible shortfall of a policy.
Red Letter:
A red letter indicates a likely shortfall of a policy.

How does my Life Company project the estimated future maturity value of my policy?
Under the rules of the FSA (Financial Services Authority) your Life Company is only allowed to project, or “re-project” as in a re-projection letter, the estimated future maturity value of your policy during the term on assumed standard growth rates currently fixed at 4%, 6%, and 8%. This is only a projection and has nothing to do with the way the Life Company will calculate the actual maturity value.

So, how does my Life Company calculate the actual maturity of my endowment policy at the end of its term?
Only at the end of the term will your Life Company calculate the actual maturity value based on bonus rates at that time. During the term of your policy your Life Company will send you annual bonus statements which will give you information on bonuses allocated to your policy and what the terminal bonus might be if your policy were to mature at that time.

Can I work out the future maturity value base on current bonus rates myself?
In principle yes, although it can be quite time consuming and you need to have all the relevant bonus rates to hand.

Can Endowment Check calculate the future maturity value of my endowment policy based on current bonus rates?
Endowment Check is using exactly the same calculation for the future maturity value of your policy as your Life Company calculates the maturity at the end of its term. If bonus rates stay the same during the remaining term then the future maturity value will match the actual maturity value you are going to get from your Life Company. As bonus rates change so does the future maturity value of your policy. We at Endowment Check are constantly updating our system with the latest bonus rates of all major Life Companies, allowing us to accurately calculate the future maturity value of your policy based on current bonus rates. With our online facility you can now check the effect of these bonus rate changes on your policy’s maturity value and monitor them over time. To take advantage of this facility simply click here to begin the Endowment Check process

The FSA provides very useful information in their consumer information telling you how to deal with an estimated shortfall and what action you can take.

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