UK ENDOWMENT MISSELLING
SHORTFALL COMPENSATION CLAIMS
We are a specialist firm dealing with endowment misselling claims for underperforming insurance policies which have been sold by a life company, broker or solicitor. We operate on a no win no fee basis and our claims are completely risk free. We guarantee that if you do not receive compensation then you will not be charged a penny. If you have received a 'Red' or 'Amber' letter from your life assurance company indicating that your policy is at risk of a shortfall and you would like free advice without obligation then just use the phone number or complete the contact form and an expert insurance actuary who is registered by the Financial Services Authority will give free advice without any further obligation.
The history of this fiasco is rooted in the 1980’s at which time using the maturity value of an insurance policy to pay off a mortgage loan was a common method of financing a house purchase. Initially these policies guaranteed to pay off the mortgage loan at maturity which was usually a 25 year term and in some cases also paid an extra amount if the policy was ‘with profits’ which promised a cash windfall at the end of the term if the insurance company had efficiently invested the monthly premiums on behalf of the borrower. This method of repayment grew in popularity especially since these policies were treated very favourably by the Chancellor in his tax regime by attracting personal income tax benefits on the premiums paid making them seem a cheaper way of repaying than a straight repayment mortgage which did not have similar tax benefits.
Insurance companies found that the only way of competing with each other to increase their market share on this type of mortgage repayment was on price and as a result started to offer cheaper products to the market place which was the start of the endowment misselling fiasco. These cheaper products obviously had less benefits, the main deterioration of which when compared with the previous offerings was that the new policies no longer guaranteed to pay off the mortgage in full and that the final value of the fund was dependent on how well the investments made by the insurance company using the monthly premiums performed.
The 1980’s were boom years for stock market investors and initially the investments of the premiums received by the insurance companies from the mortgage borrowers were more than sufficient to ensure that the projected income would be enough to repay the borrowed money however in the late eighties the world economy slowed down resulting in reduced returns from stock market investment which in general terms would have required a minimum 6% return on investments to satisfy the fund requirements to remain on target to repay the mortgage borrowing based on insurance policies.
The returns from investment in the Stock market have in general terms over the last twenty years been insufficient to satisfy the demands of mortgage borrowers and many years have had much reduced returns including stagnation and negative returns on a number of years. In many cases the current fund standing to an individuals account does not even cover the amount of premiums that have been paid in by the borrower. The government has therefore now stepped in and claims can be made against the seller if certain parameters were not met when the original sale of the policy took place.
