Endowments - how do we know if it is on target or not?

magpiecottage

dunstonh wrote: »

Most endowment payouts were due to lack of decent recording keeping/documentation rather than actually being shown to be mis-sales.

That is very much the case.

Poor documentation is a far more common reason for upholding a complaintt than positive evidence of a missale.

This is particularly the case for pre 1995 cases when LAUTRO regulated insurance companies and FIMBRA regulated IFAs.

From then, the Personal Investment Authority stipulated that all borrowers were to be given Key Features documents which included a "Risk Factors" section that explicitly warned of a possible shortfall.

It also required the issue of a "Reason Why" letter which typically recorded that the merits of both endowment and repayment mortgages had been discussed.

Whilst this does not guarantee a complaint is defensible, if it is about a With Profits endowment, the firm is in a very strong position.

Imma_Number wrote: »

Lack of transparency is my biggest bugbear with my endowment. I took it out in 1993 and so I've had the joy of seeing the bonuses applied drop from 3-4% of Sum Assured & 4.5-6% existing bonus to 0% for SA and 0.5-1.0% of existing bonus.

The problem is that investment returns generally have fallen. That wouldh ave been the same if you had chosen a unit linked fund instead.

That the final value in 2018 will depend so much on the utterly opaque final bonus is frustrating.

I agree. Historically, firms paid higher annual bonuses and relatively low final bonuses. However, in recent years the trend has reversed. This means far less gains are locked in and, in effect, much of risk is transferred from the insurance company to the policyholder.

The letters are disheartening when the bonus added for the year only amounts to less than 1/10th what was paid in.

Yes but look at it another way. I had an endowment with a guaranteed basic sum assured of £13,000. That was added when I paid my firs £25 premium
That equates to 52,000%!

If you ask your insurer for a copy of its CFPPFM, that is a document which is intended to provide some insight into how it manages its With Profits funds.

Imma_Number

magpiecottage wrote: »

I agree. Historically, firms paid higher annual bonuses and relatively low final bonuses. However, in recent years the trend has reversed. This means far less gains are locked in and, in effect, much of risk is transferred from the insurance company to the policyholder.

This pretty much what dunstonh said here: http://forums.moneysavingexpert.com/showpost.php?p=54702563&postcount=25

magpiecottage wrote: »

If you ask your insurer for a copy of its CFPPFM, that is a document which is intended to provide some insight into how it manages its With Profits funds.

I found a draft copy online of Aviva's from 2009 that seems to cover my endowment. It's 60 pages
Reading dunstonh's (5 rosettes are hard to miss) explanations over the years has moved me from angry to frustrated acceptance. I'll just wait the next 5 yrs.