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From Editor: This is a guest post from James of endowmentpolicies.org
In the early 1980s and through to the 1990s endowment policies were extremely popular, so much so that they were the first policy on offer to many people who were trying to buy a house or wanted to invest in life insurance. They were extremely attractive, and offered investors the chance to invest their money, whilst ensuring that they would both pay off their mortgage, or other investments, and end up with an extra lump sum at the end of the investment period. This offer was extremely appealing to many people, but by the late 1990s people began to realise that an endowment policy was never going to be as successful as originally thought.
Is an endowment policy a good idea?
With the financial climate as it is, and the concern people have over keeping or investing their money, the question has to be asked, could an endowment policy be a strong investment opportunity today?
With revised outlooks for the investment, and with strong advice over what may actually happen, then it could easily be argued that having an endowment policy or endowment mortgage would be an advantage to some people. The opportunity that an endowment mortgage offers you is the chance to pay off the interest of your mortgage, whilst at the same time hoping that your payments not only cover this but also the payment of the loan over the span of the agreement. Once the term has been completed the endowment policy should end up being paid off, alongside the interest, with a lump sum of money repaid to the investor. There is no doubt that as an investment opportunity, something like this could be extremely popular today.
Are there alternative ways to purchase an endowment?
With that in mind, there is an opportunity that could be appealing to investors. After the collapse of the endowment market in the late 1990s many people were urgently looking to sell or trade their endowment policy. This means that through certain means, you can purchase traded endowment policies which does not have the same length of term to run, and one that could even mature within a few years. If you were willing to take the risk, you could end up with a traded endowment policy that matured within five years, and offered you a strong return on your investment. It might be worth investigating whether a new endowment is a good investment at the moment, due to the length they usually continue for, but with investment opportunities limited, the attraction of the policy, if it works, is undeniable.
Don’t forget your added bonus
The added bonus of this kind of investment is the attachment of life insurance. Whilst it is a small addition, the security that this also offers can make endowment policies attractive to many different people, and it also means that you do not have to worry about finding an insurance provider. As long as you continue the payments for the policy, and complete it, your life insurance is secure. In the current financial climate, insurance repayments can be extremely expensive, so having this weight off your mind can also be seen as a strong addition to the endowment. It is clear that there are some benefits in finding an endowment mortgage or policy in the current financial climate, but there are risks attached. As with any investment, you need to make sure that you get the right advice before you decided to commit. As savings these days are so poorly provided for, then an endowment could really benefit you, but only if they provide what they promise. Like any investment you need to track you repayments, track the progress of the investment, and make sure you are getting the returns you want. If you do, then why not invest in this kind of policy, it could really pay off, and a lump sum of money is attractive to all of us.
About the author: James who is interested in people’s take on endowment policies and runs his own site about them wrote this article. He is learning all about mortgages and the history of investments in housing.
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