Endowments

simpsonsfan

Can anyone advise me if the money invested in endowment policies is safe? Due to the recent fiasco at Northern Rock, I was wondering if an insurance company went bust would I still get my money back?

Thanks

dunstonh

Can anyone advise me if the money invested in endowment policies is safe?

An endowment is not an investment. It is a tax wrapper that contains investments. The investments can range in risk from cash funds to Emerging markets, Asia Pacific and other specialist funds.

The risk is where you choose to invest not on the tax wrapper (container) that holds the investments.

It is highly unlikely an insurance company will go bust. The solvency requirements with insurance companies is quite high since the Equitable life issue and the weakest insurers have been eaten up by the vulture companies and they are cash rich. Indeed, it is the high solvency requirements and revised FSA requirements that has caused the bonuses to come down with many insurers and transfer future returns mainly to the terminal bonus rather than the annual bonus. It also caused many to close their doors to new business. Closed books tend to run more profitably in the short term than open ones.

I was wondering if an insurance company went bust would I still get my money back?

The FSCS applies to endowments. 100% of first £2000 and 90% of the rest.