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What is alternative to endowments?

I was pleased to know that Philip Milton found my letter of April 29 interesting.

The abject failure of a number of policies, not the vast majority, has a lot to do with a 20-year-plus consumerist-led attack on endowment insurance contracts by those who would wish to sell unitised contracts and thereby earn the obscene commission that Philip Milton refers to.

They were, of course, the banks and building societies, once the Office of Fair Trading, through Gordon Borrie, failed to uphold the maximum commission agreement. Not a problem with the contract.

Perhaps Philip Milton would like to provide your readers with some more definitive statistics about the failure rate of endowment insurances against their unit-linked counterparts.

Four years duration? I don&#39t think so Mr Milton.

My second question is in respect of “the better developing alternatives to endowment insurances.”

Endowment insurance contracts are the only genuine level-charge contracts on the market. All the charges are incorporated in the premium from inception. They only manifest themselves when a policy is terminated before its contract date is achieved.

Since when has that constituted a lack of transparency?

Endowment insurances maturing this year, after 25 years, are still returning in excess of 10 per cent per annum compound on premiums paid. They are still paying off the mortgages that they were originally intended to cover and the life insurance element within that endowment insurance is cheaper than the external market can provide.It seems pretty transparent to me.

Maybe Mr Milton&#39s problem is the fact that the insurance companies have been around for too long.

Perhaps Mr Milton would like to enlighten your readers as to an alternative savings plan that provides relative security for 95 per cent of the population who, from every major survey, (and I don&#39t mean the ones from the Consumers&#39 Association with 798 respondents but rather those that cast their net in thousands) merely require security, certainty and guarantees.

What are you going to provide for them Mr Milton? Skandia&#39s “guaranteed pension fund”? Perhaps the alternative “with-prospects funds” produced by a couple of major investment houses.

Mr Milton might also like to enlighten us as to why so many banks (Lloyds TSB in particular) use the term “low-cost endowment policy&#39 for their savings plan. Surely it was because this was a trusted mechanism that delivered just what the customer ordered. Security, certainty and guarantees. Will they do that in the future?

The planet that I am on is Earth and if Philip Milton can come up with some alternatives that work, I will move to his.

I am an insurance salesman, but not as Philip Milton knows it.

Terence O&#39Halloran

Chartered Insurance Practitioner,

Lincoln

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