Endowment Mortgage

Walker34

Hi Folks,
I bought my house almost 20 years ago and as was fashionable (rather than diligent) at the time I took out an endowment mortgage. At the time I was told that the "plan" was a simple one....i.e. I paid the interest on the loan amount plus an insurance premium on a monthly basis, and at the end of 20 years the insurance policy on maturity would pay off the initial borrowed sum.

As it turned out, I paid off the mortgage early and decided to keep paying the premium so as to have a nest egg at the end. I checked on one or two occasions how the policy was doing, and was assured by the company that it was on track to reach its target amount.

Then in Aug 2008 things started looking weird with banks collapsing and economys imploding I started ringing them more often. I was assured over the phone that I had no worries as it was a "Guaranteed sum Assured" policy. I asked them to give me something in writing to that affect and the person I was speaking to agreed to do it. A few days later I got a letter which seems to confirm that conversation.

Problem is that these can be extremely slippery individuals and their use of words can be very deceptive.
They keep telling me that the policy provides "Life cover in the amount of X" and the "Sum assured is also X". I have letters to this effect on the company's headed paper, and they are genuine, but how likely is it that they will pay out. I have never missed a payment to them over the years. What grounds do I have to demand payment in full. The Insurance Ombudsman seems to be a waste of space as I dealt with them on a different issue and their brief is so narrow as to exclude 99.999% of cases.
Any advice ore experiences would be welcome.

Hi Walker34,

It's probably a good idea to wait until the policy matures and then reconcile the actual maturity amount with the information received from the company.

Can you post the estimated value @ year 20 that you have received from the company and the premium that you have been paying?

Walker34

Expected amount is around 54k and the amount paid monthly has been 140 over 20 years

Walker34

Like I said I received numerous verbal confirmations that it would pay out the expected sum on maturity, and even got them to put it in writing recently.....so maybe it will pay out. Its just that at the time of purchase there was no question about its integrity.

That's about 4.5% pa so it sounds just about right for a conventional WP Policy maturing this year.

I just had a look at the Hibernian & Friends First Bonus Declarations. One of them was 4.3% for €75pm and the other 4.65% for €100pm.

Walker34

How severely have these policies been impacted by the current crisis ? Oh and thanks for your comments btw.

Some policies maturing early last year would probably have been in the region of 15/20% higher. I don't have the actual figures to hand for 2008 but I think it's around that figure.

Your 'typical' Managed Fund would have been down about 30% over the same period.

Walker34

Looks like the answer to that question turned out to be 20% .........so much for all the bull.... the sales rep threw at me when he was selling the scam. He told me there was added security to guard against market fluctuations, and I was GUARANTEED that it would pay out the expected amount.

When I questioned him about it now he dismisses endowment policy's as being "so out of date".....and that smart people had naturally surrendered them years ago for a loss.....they were "sooo last century"

He on the other hand got to POCKET MY FIRST YEAR OF PREMIUMS as commission plus a percentage on all subsequent payments. So much for our Ombudsman, and transparency. Easy money Huh?

I fell for the "GUARANTEED SUM ASSURED" scam until I asked a solicitor what it actually means. Its only reliant in the event of my death......its very expensive life assurance in other words. I assumed it to mean (as I was meant to) that I was guaranteed the amount promised on maturity of the policy.

JDcycle

Hi guys,

My parents have a bank of Ireland home loan endowment plan with bank of Ireland worth €30,000. Can you explain what this is as my father passed away and we are trying to sort out finances.

John