Because of stock market conditions, many endowment policies taken out in the 1980s and 1990s are unlikely to pay out the amounts originally estimated. So if you’re using your endowment policy to pay off a mortgage, it may not pay out enough to do so.
If you have an endowment policy, you should have received regular letters over the last few years telling you whether your policy is on track to repay your mortgage. These are called reprojection letters.
They tell you:
- whether your policy is still on track to pay out the amount needed to repay your mortgage at the end of the term;
- the amount of projected shortfall, if any;
- the options open to you; and
- what further action you need to take.
If you haven't received a reprojection letter, contact your policy provider and ask for one. If you have received a reprojection letter, make sure you read it and take action if you need to.
If there is a high or significant risk that your policy is not on track to repay your mortgage (so the reprojection letter is either red or amber), this section tells you what you can do about it.
