Should You Refinance Your Endowment Policies?

endownment policy

Are you bored with paying for endowment policies which you now fear may never pay off your mortgage? Would you be better off walking away? In this article I would like to look at the options that people with the once popular endowment policies now have.

Back in the 1980’s endowment policies were seen as cheap and low-risk techniques of saving for your retirement. Sadly the reality has been a little different from that which was promised by the keen insurance agents who promoted the policies to English home-owners at the time.

An endowment policy is a combination of life insurance and stock investment all backed by a mortgage against your home. Usually the policy owner has an interest-only mortgage against the property and the capital is invested into managed funds or the market. The gains of the market were supposed to pay off the home loan at the end of the policy’s term - sometimes twenty-five years.

Unfortunately the low rates and turbulent stock markets of the last couple of decades have exposed endowments as being high cost rigid investments which few people would invest in today.

So if you are the unhappy owner of an endowment policy what are your options? Well you may have more than you realize. Most policy owners would only think about selling their policy back to the company that they bought it from. But when they find out how low the surrender value is they are typically disappointed and feel they have any option but to stay invested in the endowment.

Selling to the first company isn’t your sole option though - there is a healthy 2nd hand market of buyers who are prepared to purchase your endowment policies. The best way to find these potential speculators is to go thru an on line endowment mortgage brokerage - these agents will take a cut from the price but you may still get significantly more than the surrender cost of the policy with the first company.