'Assured' Endowment - ok or not ?

Jangles_Money

Hi everyone,

this is my first post so be gentle.

I am not much of a money saving expert but hopefully with your help I can get there! Hope my post doesn't have you banging your head on your keyboard!

I have had a 25 year Abbey Life endowment policy (they refer to it as a mortagemaster plan) running since 1992 and I have always thought despite the endowment horror stories that mine was okay because of the wording of the policy - the amount I was after, in this case £50,00, is referred to on my policy documents as the 'Sum Assured'.

I get a projection each year .. There is no mention of the assured sum now, it is refered to as the target amount. The last information I received says that with a 6% growth projection there would be around a shortfall of £20,000. Ouch.

Now maybe I very young and naiive but I always thought that if I died or preferably just kept up with my repayments that I would definitely get the 'Assured' amount. Because I was so certain of this that I never made a claim against misselling. But I am not sure anymore. On maturity of the policy will I receive the Assured sum?

I am fearing the worst but if this is not the case, what is my best course of action?

Many thanks,

Jangles.

payless

The term assured is likely referring to the death benefit

dougk_2

As payless said , the sum assurred is likely to be the amount paid in death benefit. It is unlikely to be the minimum amount you would be paid out on maturity.

However IMHO, you are not even half way through your 25 years and although 20,000 seems a lot now in another 13 years time it would probably in real terms be about £5,000 - £10,000 in todays money.

Also are you likely to move before your 25 years are up and are you likely to be on a higher salary through job changes or promotions?

If you remortgage at any point (which i suggest you would) you can always change to part interest only and part repayment to ensure you pay up in full by the end of 25 years.

If you have money to spare you could even change to a full repayment mortgage and keep the endownment as a savings plan (like I have decided to do).

serpico

"SUM ASSURED" must surely have definately misled thousands if not millions to believe that this was the sum guaranteed to be paid out at the end of the payment period.

I wonder how many Policy Holders attention was drawn to the fact that this "sum assured" specifically only applied on their death by whoever was selling it to them for a massive commission.

MarkyMarkD

They weren't misleading in the way you suggest. Quote from my own SL policy which was meant to cover a mortgage of £23,500:

A sum assured of £7,638 payable on the death of the first to die ...

Notwithstanding the above, the amount payable on death under this benefit including attaching bonuses is guaranteed to be not less than £23,500 hereinafter referred to as the guaranteed minimum death benefit

There's no implication in there that the £23,500 is the sum assured, because it's not.

payless

Mark, yes in with profits its usually easier to spot the different as 2 amounts detailed, my guess is the OP policy may be unit linked.

Obviously it should have still be explained / laid out not to confuse

MarkyMarkD

Unit linked don't have a sum assured. ???

payless

Mark

Abbey Life was mainly a "unit linked office" and as the OP mentioned it was an "Abbey Life Mortgagemaster plan" which I belive was a totally unit linked policy and the OP says it states sum assured, I can only assume I was correct in my original assumption

some call it life cover, some death benefit others I believe confusingly call it "sum assured ( on death)