The BBC has reported on the final payment shortfalls for UK home owners who took out an endowment as part of their home mortgage repayment. However, policy holders are often unaware of the cash benefits of selling rather than surrendering their policies to the issuing life company.
In response to the article, Alec Taylor, Head of TEP Investments at SL Investment Management said, “Despite annual returns for 25 year term policies maturing in 2012 averaging a healthy 6.8%(*) per annum, this figure is often lower than the return used to project final payouts when the products were originally sold to home owners in the late 1980s. Unfortunately, this will naturally lead to potential shortfalls in mortgage repayments, despite the relative performance of maturing endowments remaining strong in the current economic climate”.
But other options are available to policy holders concerned about the payment shortfall and looking to restructure their mortgage.
By ‘trading’ or selling their policies, homeowners can often receive a greater lump sum than they would have received either at the end of the repayment term or by surrendering early. As Endowment Policy specialists, Surrenda-Link Ltd, (the consumer facing arm of SL Investment Management) provide policy-owners with a fast, efficient service and customers often receive their policy pay-outs within 18 days of policy acceptance.
Taylor said, “Policy holders are often unaware that there is a secondary market for these assets, and lose out by surrendering their policies back to the issuing Life Company. There is still a healthy market in the trade of these assets, as secondary investors continue to recognise the strength of with-profits and the potential for future growth”.
For more information on how to sell your endowment to Surrenda-link, or how to invest in a policy on the secondary market, please contact Surrenda-link on 0800 919 021.
* as quoted in the April 2012 Money Management with-profits survey