Can anyone remember Endowment mortgages?

[YNK]

Back in the 80's I discovered by accident that my parents had taken out life insurance on me without my knowledge.
Was that a normal thing back then?

Yes it was standard when arranging a mortgage.

Sorry, were you party to the mortgage?

I hadn't lived with my parents for many years and had no idea they had taken out a policy on me though.
I had no idea you could insure someone without their knowledge.

Yes, luckily by the time I bought my first house in the mid-90s the pitfalls were well known so I never had one.

No nothing at all to do with me.

Do you mean their Life Insurance Policy would also pay out in the event of your death? Because mine and DH's Life Insurance also does that. Or do you mean they took out a totally separate policy just covering you? How old were you?

yes , we had 2! but no idea about taking out an insurance policy on an u witting 3rd party though

My first mortgage was an endowment. I was miss sold. I can remember the branch manager promising me that the endowment policy would pay off the mortgage & give me some cash. I did get compensation. I didn't insure anyone else though 😂

You can't now. The rules are very strict. I'm surprised you were party to the endowment given you weren't on the mortgage.

Yes we had an endowment mortgage in the 1980s and like so many other people, it was mid-sold. We got enough compensation for the mortgage to be paid off after the 25 year period.

I would have been married, in my mid 20s and lived 400m away from them, although they could have been influenced/advised by my now ex DH.

I don't understand why this was never discussed with me,

They were all the rage when I bought my first house. My understanding of them was that the insurance was on the life of the mortgage holder(s). I never heard of anyone insuring the life of a third party

Yes, that's exactly why I'm having a little niggle.

My ex DH was a very devious man. If I had died during that period could he have benefitted in any way or would it have just paid off my parents mortgage?

Depends if the policy was assigned to the lender or not and who the policy holder was.

Endowment policies are very different things to life insurance. I think you may be confusing them as it was common to stipulate you had to have life insurance if you had an endowment

life insurance simply pays out if you die

an endowment is a form of investment where you pay in each month and when it ends (matures) the payout would pay your mortgage loan off. In theory…

I only saw it by accident and know the policy covered only me.
Wouldn't it have to be payable to the mortgage holder or could my ex have been a beneficiary?

Yes, my parents had one. They took it out in the early 70s so by the time their mortgage was due to be repaid in the 90s inflation had rendered it pretty small anyway, and the policy paid it off with no drama.

The main benefit was the life insurance element, plus back in those days there was a chance of the policy over performing and giving a surplus at the end of the term.

It was a different story for people taking them out later, when markets had changed - endowment shortfalls were a huge problem, so that sort of mortgage became obsolete. Many people claimed they'd been 'guaranteed' that the mortgage would be repaid, and if this was upheld by the Financial Ombudsman, it was costly for the banks to make up the shortfall.

I think my parents were one of the few that did well out of theirs. It paid out way more than their mortgage.

My mum took one out in 1986, but luckily for her it was one of the ‘good’ ones and she made money on it. I think they went rapidly downhill after that.

When I came to get a mortgage in 1994, which was only 8 years later, we were offered a repayment one, I don’t even know if the endowment ones were still available?

The endowment policy is (was) a life insurance policy and savings policy, so anyone could have one, without it being assigned to a mortgage.
Usually (and the way most people will be talking about them) they were offered for an amount that was forecast to pay off your mortgage.
But you could take one out, without it being set against a mortgage.

I had a friend whose parents took one out for each or their late teen / early 20s dc, so it was already 5 years or so paid off before they even were ready to buy their first property.

The idea was that the policy grew enough that, at maturity, it matched the amount you still had on your mortgage but they were very easily ported to a different property when you moved house.
Where people had done their research, and understood them, they worked well. The issue was so many people didn't equate the fact that interest rates dropping hugely on their mortgage ALSO meant that interest rates on wherever the endowment were dropping furiously at an equivalent rate.

My parents had an endowment mortgage and it did very well for them.

Endowment policies normally paid off the mortgage in the event of the mortgage holder's death.

It sounds like this might have been a separate policy taken out simultaneously. If it was taken out by your parents, the money would have gone to them.

Very unusual as you can normally only insure your own life or that of your spouse/partner.

Us too @Farwell. We paid off our endowment mortgage in 2005. Worked out what was in the 'pot' and with the terminal bonus as well it saved us spending out another 10 years of mortgage payments. Ok, I admit it was nothing like as much as forecast but it came through for us.

Endowment policies normally paid off the mortgage in the event of the mortgage holder's death.

No, they were a savings tool designed to pay off the mortgage when the policy matured

Yes, we had an endowment mortgage. We did actually off our mortgage about 15 years early, which was just as well because when the endowment finally matured after 25 years it didn't yield enough to cover the original mortgage. But it did cover an expensive holiday 😂
I think the fact that so many endowment policies fell short of the sums needed was what finally scuppered these kind of mortgages.