Frequently asked questions about endowments.

What is an endowment?

An endowment is an investment product, which will pay out a cash lump sum on a fixed date in the future. The product also provides life cover and will pay out a guaranteed amount if you die before your plan matures. Some plans will pay out a guaranteed amount in the event of sickness or disability, as specified in your plan provisions. You make monthly or annual payments into your endowment until a specified date. An endowment may run alongside your mortgage with the aim of paying off a lump sum at the end of your mortgage term. However, as investments can vary in value, the policy may not pay out enough to repay the mortgage at the end of the term.

How is my money invested?

If you are invested in a with profits endowment, we combine your money with that from other investors into the With Profits Fund. This allows you to enjoy the benefits of a potentially wider range of investments than if you invested on your own. The With Profits Fund is primarily invested in a mix of UK and overseas shares, fixed interest securities and commercial property.

If you are invested in a unit linked endowment, we invest your money by purchasing units in your selected unit linked fund(s). The value of the units depends on the value of the underlying fund(s).

To find out more about how we manage investments please see the Useful Information section below.

How can I find out how much my endowment plan is worth?

We will send you a letter every two years, unless you are within the last five years, when we will send one every year, which provides a re-projection of your value based on our current assumptions. The letter tells you whether your endowment is projected to reach its target amount, or whether it is heading for a shortfall. A shortfall is when the value is anticipated to be less than the target amount. If you are a with profits endowment customer, you’ll also receive an annual bonus statement showing the performance of your investment.

If you are a savings endowment customer you may not receive a re-projection letter. However, you'll receive an annual statement showing the performance of your investment for the previous year as all endowment customers do.

If you haven't received a recent update from us, you can call 03700 500 263 to request one. Call charges will vary. We may record and monitor calls.

My re-projection letter is classed as red, amber or green. What does this mean?

Our regulator requires that plan update letters are colour-coded red, amber or green to indicate whether, based on our current assumptions of future investment returns, your plan is likely to meet the target amount, which is typically your original mortgage amount.

If we send you a 'red' letter this means that based on our assumptions there is a high risk that your plan will not reach the target amount at the end of the endowment term.

If we send you an 'amber' letter this means that based on our assumptions your plan is at significant risk of not meeting the target amount at the end of the endowment term.

If we send you a 'green' letter this means that based on our assumptions your plan is currently on track to meet the target amount at the end of the endowment term.

If your plan matures in the next few years, the current economic and financial conditions may have an impact on your investment returns. It is impossible to be certain about future investment growth. The final value of your endowment plan could be lower or higher than shown in your re-projection update letter.

It is important that you check each plan update letter, even if the plan has so far been on track. This is especially important if your plan is close to maturity. You should continue checking your projected value until the end of your plan term.

How can I deal with a shortfall on my plan?

There are several ways that you can deal with a shortfall on your plan.

The Money Advice Service has produced a guide to help people who may be facing a shortfall on their endowment plan.

You can request a copy of this guide by calling the Money Advice Service helpline on 0300 500 5000 or by visiting the Money Advice Service Free printed guides page.

Can I cash in my endowment plan?

Yes, it is important to remember that you may get back less than you paid in if you cash in your endowment before the maturity date as set out in the terms of your plan.

If your plan starts with a 0, you can sell your endowment. The Money Advice Service has put together some useful information to help people who are thinking about selling their endowment.

If you are considering surrendering or selling your plan it is important that you take financial advice.

Useful information

The information on this website and in the associated documents is a summary. Full details are set out in our 'Principles and Practices of Financial Management' booklet. But don’t forget to have a look at our customer friendly versions of this document:

‘An introduction to unitised with profits’ is a customer friendly guide for plan numbers starting with a UK.

‘An introduction to conventional with profits’ is a customer friendly guide for plan numbers starting with a 0.

You may also find the ‘Report to Policyholders’ useful.

‘Unit-Linked Fund Guide’ contains more information on how we manage unit-linked funds.

For more detailed information relating to your particular circumstances, please talk to your financial adviser. You can also talk to us on 03700 500 263 to discuss the options open to you and we’ll explain how the endowment sales process works. Lines are open Monday to Friday 9am to 5pm. Call charges will vary. We may record and monitor calls.

How can I complain?
If you have a complaint about the advice you received when you took out your plan or a complaint about the ongoing servicing of your plan, please contact our complaints department.

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