Some insurance companies only have one in one hundred endowment policyholders on target to repay their mortgage and over 3 million homeowners have been warned that their policies will not fully repay their mortgage when the time comes.

With-profits endowment policies were sold a reliable way to repay your mortgage as the insurers added an annual bonus to the policy every year and then added one big bonus at the end of the policy’s term. Projections were then used to show how the bonuses would add up to produce an investment sum that would exceed the money you took out on your mortgage. Throughout the 70’s and 80’s Policyholders were assured that this was the savvy way to finance the repayment of your mortgage. They had never failed to perform and they never would.

Never say never!

The insurance companies all blame the failure to reach investment targets on the performance of the investment markets, it’s not their fault! But if that was the whole reason why is Standard Life facing 98% of its policies behind target whilst Royal London only has 2% behind target? It seems clear that the worst performing insurers cannot entirely blame the stock market. In actual fact, to us it seems that the insurers themselves are to blame!

Another question supports our belief. The insurers have resolutely failed to explain how policies that were previously on target can suddenly fall behind so much. For example, last year only 19% of the Pru’s 164,000 endowment policies were likely to fall short of their target. That figure has now risen to 74%. How come?

Perhaps the insurance offices would care to explain.