Endowment mess my parents are in

Withheld75

Hello,

My parents purchased a place in 1989 which was covered with an endowment with profits 20 year morgage. They have settled the debt with the Abbey which lent them the money about 4 years ago but they still have the endowment which will end in 2009 and to which they still pay £150 every month.

I have looked on the web but are no nearer to finding the answers to the queries I am looking for on their behalf. I would be most grateful for any general guidance on this.

Q1) Will my parents get the cash value of the endowment in 2009?
Q2) Is tax payable?
Q3) Will they be effectively worse off tax-wise by having used their savings to pay the morgage early instead of using the endowment at the end of the term?
Q4) If they stop paying the £150 pounds per month are there generally penalties for this?
Q5) Should they fill the FSA complaint all the same even if the debt has been paid off?

Thanks heaps everyone,
Marco

dunstonh

Q1) Will my parents get the cash value of the endowment in 2009?

Yes

Q2) Is tax payable?

No

Q3) Will they be effectively worse off tax-wise by having used their savings to pay the morgage early instead of using the endowment at the end of the term?

Maybe. Maybe not. Depends on what their mortgage rate was. What the returns on the endowment have been. Whether they have begun to save/invest again with the money they are not paying into the mortgage.

Q4) If they stop paying the £150 pounds per month are there generally penalties for this?

Depends on whether they surrender or make the policy paid up. Stopping premiums will stop the life cover and will reduce the basic sum assured if it is a conventional with profits plan.

Q5) Should they fill the FSA complaint all the same even if the debt has been paid off?

The FSA don't take complaints. What do they want to complain about?

Withheld75

Thanks for your help. I have a much better idea now.