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  • Endowments

Endowments

Endowment Policies

These are life insurance policies that are designed to pay a lump sum after a specific term, and pay out a guaranteed sum if the person insured dies within the term of the plan.

Although it is still possible to buy endowments that guarantee the value of the lump sum at maturity, the majority of policies do not guarantee the maturity value - the money that you get back will depend on the value of the investments within the policy.

By using life insurance policies, the value of the plan at maturity can be paid without paying any further tax if certain ‘qualifying conditions’ are met. Although the policy holder can avoid paying any tax at maturity, the insurance company does pay tax on income and gains within the policy.

These policies can be particularly useful if you have an investment objective you’d like to realise regardless of what happens to you, for example to repay a mortgage; provide a legacy for your children; provide for university fees etc.

However, the policy charges and the cost of the life insurance means that it can take several years before the endowment’s value is greater than the contributions paid in. Also, there are other, more tax efficient and less expensive investment options available, so if you do not have any need to guarantee a sum will be paid if you die, an endowment is unlikely to be the most suitable option for you.

As with most investment the value of an endowment depends on investment performance and is not guaranteed.

The value of investments and the income they produce can fall as well as rise. You may get back less than you invested.
Tax treatment varies according to individual circumstances and is subject to change.

Endowments

Endowment Policies

These are life insurance policies that are designed to pay a lump sum after a specific term, and pay out a guaranteed sum if the person insured dies within the term of the plan.

Although it is still possible to buy endowments that guarantee the value of the lump sum at maturity, the majority of policies do not guarantee the maturity value - the money that you get back will depend on the value of the investments within the policy.

By using life insurance policies, the value of the plan at maturity can be paid without paying any further tax if certain ‘qualifying conditions’ are met. Although the policy holder can avoid paying any tax at maturity, the insurance company does pay tax on income and gains within the policy.

These policies can be particularly useful if you have an investment objective you’d like to realise regardless of what happens to you, for example to repay a mortgage; provide a legacy for your children; provide for university fees etc.

However, the policy charges and the cost of the life insurance means that it can take several years before the endowment’s value is greater than the contributions paid in. Also, there are other, more tax efficient and less expensive investment options available, so if you do not have any need to guarantee a sum will be paid if you die, an endowment is unlikely to be the most suitable option for you.

As with most investment the value of an endowment depends on investment performance and is not guaranteed.

The value of investments and the income they produce can fall as well as rise. You may get back less than you invested.
Tax treatment varies according to individual circumstances and is subject to change.

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Company address: Hartley Hepworth Financial Planning Ltd, Howbrook Farm, Howbrook Lane, Sheffield, South Yorkshire, S35 7EH T: 0114 2848808 E: info@hartleyhepworth.com

Hartley Hepworth Financial Planning Ltd is an appointed representative of Quilter Financial Services Limited and Quilter Mortgage Planning Limited which are authorised and regulated by the Financial Conduct Authority.

Hartley Hepworth Financial Planning Ltd is registered in England and Wales, Company No: 04675658. Registered Address: Howbrook Farm Howbrook Lane, Howbrook Wortley, Sheffield, South Yorkshire, S35 7EH

The guidance and/or information contained within this website is subject to the UK regulatory regime, and is therefore targeted at consumers based in the UK.

Approver Quilter Financial Services Limited and Quilter Mortgage Planning Limited.05/07/2023

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