Endowment Compensation Calculation Query

amd

I finally got an offer for my endowment compensation claim. I understand they are offering me the difference on the amount I would be still owing as if I had taken out a repayment mortgage instead in 1988, less what would be still outstanding on it.

That sounded quite fair, until I remembered I would surely also have been paying a life insurance policy on top all those years too. Surely that should be calculated in too as it is with the endowment policy.

Don't mean to grumble, but we're needing every penny just now as we're not in a position to remortgage and are stuck with what we have.

Has anyone ever challenged and had their offer increased?

Mr_helpful

I dont think you can because that was one of the benefits of the endowment that the life assurance was covered. With a repayment mortgage it is entirely separate. This was a small part of why endowments were often more popular because they were cheaper. You are not obliged to have life assurance with a repayment mortgage (just an idiot if you dont in cases where you have dependents ) so they are not obliged to compensate you for it.

dunstonh

That sounded quite fair, until I remembered I would surely also have been paying a life insurance policy on top all those years too. Surely that should be calculated in too as it is with the endowment policy.

This is taken into account in the calculation. It actually reduces your redress, not increase it as you seem to believe.

Its interest only mortgage plus endowment versus repayment mortgage plus decreasing term assurance. If you have a family or financial dependents, you will not be able to get the life assurance policy taken out of the equation. If you are single with no dependents, you should be able to.

Has anyone ever challenged and had their offer increased?

Some have. Some have had it increased. Some have had it reduced.

turbobob

Yes, taking account of life cover in the calculation is normal if your circumstances were that it would have been "appropriate".

It does (or at least can) reduce the amount of redress payable, as it usually makes the repayment mortgage more expensive than the endowment mortgage.

If life cover has been used in the calculation, then you should be offered replacement cover at preferential rates (if you are dealing with a life company which offers it) or otherwise a lump sum equivalent to any additional costs to replace the cover, over and above what it would have cost you if you had taken a repayment mortgage in 1988.

Bear in mind that life cover is generally a lot cheaper now than it would have been in 1988, and it will be for a reduced amount so often no extra amount will be due for replacement life cover.