With research showing more than 70 per cent of endowment mortgage holders being told their investment is unlikely to pay off their mortgage. Brian Goldstein, Chairman of the Association of Policy Market Makers, says policyholders should not panic.
Mr Goldstein said that as notification letters landed on doorsteps some homeowners might consider surrendering their endowment policy, however he warned they might not realise the value of the bonuses they had accrued.
"While many people are facing endowment shortfalls, they shouldn't rush into surrendering their policies. I would urge those with endowments to seek professional advice before they act.
"Policyholders often fail to realise that the value of the endowment they are considering trading or surrendering comes with bonuses that, once declared, cannot be taken away," he said.
Mr Goldstein said that unwanted endowment policies are being snapped up as traded endowment policies, or TEPs, by people eager to boost their pension savings or to save for their children's education.
"Investors recognise the locked-in value of many endowment policies and are keen to invest in a vehicle with a known maturity date and a minimum guarantee.
"However it is important for the original policyholders to be aware that they could lose out by giving up a valuable investment and all endowment policyholders should seek advice before they sell their policies," Mr Goldstein said.
