Legal & General Offer Good News
In a rarity for this site, I am again pleased to be able to write that a life assurance company is offering their long suffering endowment policy holders some good news.
Legal & General announced last week that their with profits fund experienced a 19% investment return during 2005. This meant that L&G could increase terminal bonuses for the majority of its 900,000 with-profits savers.
Additionally, L&G said that it had reduced the penalties policyholders had to pay if they cashed in their policy early.
The bonuses would vary from policy to policy, but people with a conventional endowment policy would receive 0.75% on their sum assured and 1.25% on bonuses they had previously been paid.
Someone with a 25-year low-cost mortgage endowment policy into which they have paid £50 a month will receive a final payout of £45,769, compared with £42,743 if the policy had matured a year earlier.
L&G claim that the strong investment returns seen during the year, were likely to reduce the number of people with endowment mortgage shortfalls.
In 2004, 55% of their policyholders were warned that their policy would not be large enough to repay their mortgage.
This "good" news from L&G, I would remind you that these policies were designed to pay off the mortgage, again calls into question the skills of some of the other life assurance companies who have announced cuts this year.