Endwoments

An endowment is a life assurance policy that is designed to help pay off a mortgage by investing the monthly premiums paid to the provider. The original mortgage sum is covered by the policy, while the interest on the mortgage is paid for by the policy holder. Eventually the policy holder receives a tax-exempt lump sum once the endowment matures. Traditionally, endowment policies were able to pay off the mortgage and still have some money left over afterwards for the buyer. However due to the present situation of tax increases and a less profitable investment market, not all policy holders receive enough to even pay off the mortgage.

Generally endowments provide a life cover that guarantees that should the policy holder die, a portion of the sum is returned to his or her estate. As the mortality rate increases with age, endowment policies tend to be more expensive the older the buyer is when they purchase one.