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Endowment Misselling

Mis-sold Endowment

Endowment Survey

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Endowment Check - Survey ::

Facts and Figures

The purpose of the exercise was to illustrate the percentage of policies, which are likely to miss or reach their target amount. We have used 1297 randomly selected policies from 10 randomly selected life companies of EndowmentCheck subscribers. For each life company the table shows the highest and lowest percentage figure above and below the target amount and the resulting average percentage figure.

Case studies

The study comprises of three different randomly selected policies. The purpose of the exercise is to illustrate the different calculation in a re-projection letter issued by a Life company and EndowmentCheck’s own calculation based on actual bonus rates. This study is ongoing and current.

Estimated Maturity Value (EMV) to Target Amount (TA) Analysis
Life Office	Total No. of Policies	No.of Policies above Target	%	No.of Policies below Target	%	Max% over TA	Min% over TA	Avg% over TA	Max% under TA	Min% under TA	Avg%under TA
Clerical Medical Friends Prov. Legal&General Norwich Union Prudential Royal Life Scot. Amicable Scot. Widows Standard Life Sun Alliance	86 50 65 135 61 96 57 36 634 77	12 13 26 48 46 46 35 8 145 16	13.95% 26.00% 40.00% 35.56% 75.41% 47.92% 61.40% 22.22% 22.87% 20.78%	74 37 39 87 15 50 22 28 489 61	86.05% 74.00% 60.00% 64.44% 24.59% 52.08% 38.60% 77.78% 77.13% 79.22%	48.08% 34.28% 46.97% 48.25% 49.51% 49.17% 48.72% 44.08% 48.32% 32.96%	7.71% 1.64% 2.64% 0.24% 0.49% 0.10% 3.91% 2.12% 0.02% 0.92%	20.54% 15.71% 22.15% 16.96% 19.12% 12.73% 25.93% 19.56% 19.84% 8.79%	-33.58% -48.14% -45.95% -39.79% -43.00% -44.38% -30.99% -40.61% -49.09% -38.19%	-0.34% -0.11% -0.58% -0.08% -0.38% -1.25% -1.18% -0.57% -0.03% -0.40%	-15.93% -31.56% -27.34% -15.59% -11.01% -23.11% -12.65% -25.72% -21.71% -28.32%
Total	1297	395		902

EndowmentCheck Target Amount Case Studies 15-2-06

Case Study 1

Life Office: Scottish Amicable

Start date of Policy: 1 June 1983

Maturity Date: 1 June 2008

Sum Assured: £4,656

Premium: £22.00 / month

Target Amount: £12,000

Re-Projection letter rec’d	4% growth	6% growth	8% growth	Endowment Check EMV
2000 green*	£13,700	£15,800	£18,200	£21,498
2003 green*	£11,800	£13,000	£14,400	£14,728
2004 green*	£12,700	£13,600	£14,500	£14,625
2005 green*	£13,600	£14,300	£15,000	£14,625

*The table clearly illustrates the difference results between the re-projection figures provided by the life company and Endowment Check s maturity calculation using up to date bonus rates.

Case Study 2

Life Office: Prudential

Start date of policy: 1 December 1987

Maturity date: 1 December 2012

Sum Assured: £10,800

Premium: £41.70 / month

Target Amount: £30,000

Re-Projection letter rec’d	4% growth	6% growth	8% growth	Endowment Check EMV
2002 red*	£21,700	£25,500	£29,800	£34,232
2003 red*	£21,700	£25,300	£29,500	£32,882
2005 amber*	£24,800	£28,300	£32,100	£33,249

*Although red and amber letters where issued suggesting a potential shortfall, Endowment Check s calculation proves in all cases that the target amount will be exceeded if bonus rates where to stay the same.

Case Study 3

Life Office: Scottish Widows

Start date of policy: 12 March 1984

Maturity date: 12 March 2009

Sum Assured: £5,505

Premium: £165.38 / year

Target Amount: £15,000

Re-Projection letter rec’d	4% growth	5% growth	6% growth	Endowment Check EMV
2003 red*	£12,300	Not supplied	£13,700	£15,052
2004 red*	£12,300	£13,000	£13,700	£14,722
2006/1 red*	£13,100	£13,600	£14,200	£15,304
2006/2 red*	£13.300	Not supplied	£14,400	£15,304

*Although red letters where issued suggesting a potential shortfall, Endowment Check s calculation proves in all cases that the target amount will be exceeded if bonus rates where to stay the same.

How does a valuation based on current bonus rates used by EndowmentCheck differ from a Life Company's projection?

Under the rules of the FSA (Financial Services Authority) Life Companies project the estimated future maturity value of endowment policy on assumed standard growth rates of 4%, 6%, and 8%. This is only a projection and has nothing to do with the way a Life Company calculates the actual maturity value. Only at the end of the term will the Company calculate the actual maturity value based on actual bonus rates and sum assured at that time, (basic sum assured accrued bonuses terminal bonus=maturity value). EndowmentCheck is using exactly that calculation to work out the future maturity value (this maturity projection is also being used in the UK Traded Endowment Market).

This means, that if bonus rates stay the same during the remaining term then the future maturity value (based on actual bonus rates at valuation date) will match the actual maturity value at the end of the term. Obviously, as bonus rates change so will the future maturity value of a policy. We are constantly updating our system with the latest bonus rates of all major Life Companies, allowing us to inform our clients instantly by email and to accurately re-calculate the future maturity value of a policy based on the new bonus rates. With our online facility the visitor can immediately check the effect of these bonus rate changes on their policy’s maturity value and monitor them over time. This is also an ideal tool to compare the accuracy of life companies’ re-projection letters.

What Actuaries say to projections and transparency - With Profits: Three Actuaries say No

Genuine Testimonials:

"After saving me £3,600 in premiums - Endowment Check proved to be a good investment."