Endowment Policy help?

secretj_2

Hi,

When I was born my father set up a Endowment policy with Brittania now Alba Life but also this was the time when my parents separated. I have very little contact with my father and would like someone to help me understand what a endowment policy is?

Can I pay into this account myself?
Is it a good policy to invest most of my savings?
What are the pros and cons of this policy?

I also recieved a 'projection' letter from Alba life and says the current amount if I die but who would this go to? I am not married or have children I am just a student living at home with my mum.

Thank you

Jessica

dunstonh

I have very little contact with my father and would like someone to help me understand what a endowment policy is?

They were the old fashioned way of saving. In the "old days" they gave the impression of good returns because the UK economy was boom/bust with periods of high inflation. Endowments look very good under those circumstances.

Nowadays, plans have much lower charges and are much more flexible. However, a few of these old duff endowments still exist (ie, AXA "Carol Smilie" cashbuilders).

Can I pay into this account myself?

Some you can alter but the payer would have to do this.

Is it a good policy to invest most of my savings?

No. Only higher rate tax payers who are using their ISA allowance would still possibly include a type of endowment nowadays.

What are the pros and cons of this policy?

List is too long but as you wouldnt be looking at one of these for new money unless you happen to be a higher rate taxpayer with ISAs used up then you shouldnt worry about it.

I also recieved a 'projection' letter from Alba life and says the current amount if I die but who would this go to?

Assuming the policy isnt in trust to anyone else and you are the life assured, the proceeds would be paid into your estate and follow the instructions from your will. If you dont have a will it will follow the rules of intestacy.

Basically, ignore endowments as a savings vehicle for new money. Things have moved on and there are much better savings alternatives.

secretj_2

Thanks you have been helpful!

But still need advise on the money I have and where to put it.

Anyone know where I can go in London to get finacial advise for free too?

dunstonh

Look up an IFA in your postcode area from www.unbiased.co.uk