There are approximately 8.5 million endowment policies still in force in the UK. It has been estimated that almost 80% are in danger of falling short of the sum required to pay off the policyholder's mortgage. Insurers are required to write to endowment policyholders every two years and inform them whether their investment is on track to meet the target sum. MoneyMonkey.co.uk can provide you with valuable services to help put you back on track.

We have teamed up with some of the leading experts in the UK. Some of the ways we can help include:

• Making a claim for compensation if you believe you were not warned of a shortfall - click here.
• If you are considering Surrendering Your Policy, you may wish to consider the alternative of selling the policy to a market maker. They can often offer up to 40% more than the current surrender value - click here.
• For replacement life insurance cover please click here.
• Switch to a repayment mortgage. This means that in addition to paying off the mortgage interest each month, you make extra payments to start paying off the underlying mortgage debt. This reduces the size of the mortgage, and thus should reduce any shortfall caused by the endowment under-performing - click here.
  

What is an endowment?

Endowments are life assurance products acting as an investment vehicle. They are regular-premium savings plans in which payments are made monthly for a set period of years. The money is invested, usually in a selection of stocks and shares, and at the end of the agreed period the investor receives a lump sum, free from all taxes.

The policy could pay out more or less than you need to repay the loan. The policy also provides you with life insurance cover for a set amount, which is usually the same as the mortgage loan.

Endowment mortgages

A low-cost endowment is a combination of a life assurance plan and an endowment savings plan. They are usually sold as a way to build up a lump sum to pay off a mortgage.

A saver who takes out an endowment mortgage pays only the interest on the mortgage, not the capital sum. The endowment, usually a 25-year savings plan, is then used to build up sufficient capital to repay the capital sum. If the endowment generates more funds than the amount of mortgage outstanding, then the investor receives the surplus tax-free. If the amount is not enough, the investor has to make up the difference.

Endowments were very popular in the 1980s as a way to pay off a mortgage, but declined steeply in popularity during the 1990s as interest rates fell and the endowment pro ceeds often did not cover the repayment of the mortgage. This has led to major problems with endowment mortgages.