Endowments...Confused!

19lottie82

I'm interested in an endowment policy of some sort, based on what I understand, but tbh, that isn't a lot!

What I know is they involve monthly payments which lead to a lump sum after a specified number of years. And that's about the extent of my knowledge!

I've heard they are linked to mortgages (which I have), but then also to life insurance (which I have through my employer, but not personally).

I'm 33 and have mainly heard of them being mentioned by people aged 50 +. Are they still common, and if so where would I start?

What are their advantages and disadvantages?

Thank you.

kingstreet

No longer marketed.

An ISA is a more tax-efficient home for savings and if there is one, a need for life cover can be met by a term assurance.

Packaged plans like endowments had high charges and stopped being tax efficient years before they were discontinued.

19lottie82

Ah OK, thanks Kingstreet, that's good to know.

I do have an ISA, so I suppose I'll just keep saving in there. I just fancied the idea of something I could throw a few pounds a month at and essentially forgot about / not access, until X years down the line where I'd get a lump payment.

Thanks again.

dunstonh

I'm interested in an endowment policy of some sort

Why? The last mainstream provider of endowments stopped retailing them in 2004.

I've heard they are linked to mortgages (which I have)

No. There were savings endowments too.

but then also to life insurance (which I have through my employer, but not personally).

It is a mandatory requirement they have an element of life assurance. However, some had a nominal amount of 0.1% just to qualify as being classed as a life funds investment (and get the appropriate tax treatment). Death in service from work is there to replace short term income. It is rarely enough unless single.

Are they still common, and if so where would I start?

No and you dont.

There was a last ditch attempt to lower the charges and were they still available, they would likely match current products on pricing. However, the problem was commercial.
1) the name was damaged reputation wise
2) other tax wrappers existed which covered the majority of people. only higher rate taxpayers who would be basic rate in future who had already used their S&S ISA allowance in full could really have a tax need for an endowment policy. That is not much of a market.
3) single premium endowments lasted a bit longer but single premium whole of life polices took over as being more flexible but they are on their way out now. Again, the S&S ISA allowance is much higher and sales of them is in decline.

I do have an ISA, so I suppose I'll just keep saving in there. I just fancied the idea of something I could throw a few pounds a month at and essentially forgot about / not access, until X years down the line where I'd get a lump payment.

The S&S ISA fits that purpose.

19lottie82

Thank you, I'll look into a S&S ISA then, as more of a long term savings plan.

Would I be best doing this through an IFA, or is it something I can easily do myself?

Pete9501

19lottie82 wrote: »

Thank you, I'll look into a S&S ISA then, as more of a long term savings plan.

Would I be best doing this through an IFA, or is it something I can easily do myself?

Persuaded son to invest £200 a month in a S&S ISA. Went to the local IFA and he came up with one in Old Mutual (formerly Skandia). He pays more for a manged service but the returns are much higher and it is doing rather nicely. If you have paid into your current ISA this F/Y that complicates things slightly, but worth shopping around to see the big picture. You will have to pay for an IFA but the returns could make it worth while in the long term.