Low Cost Endowment policy & Endowment Mortgages
It seems as though you purchased what is called a Low Cost Endowment policy. In many cases this policy was sold in connection with Endowment Mortgages, however, not exclusively.
This type of policy provides a cost effective combination of a savings return at the end of the term, or a death benefit should the policy holder die during the term of the policy. From what you tell me, it appears that this is what you may have required, so it is unlikely that any mis-selling occurred.
As has been recently reported on Prime Time there may be a shortfall on some Endowment Mortgages when they reach their term. As such, last year Royal Liver wrote to all their Low Cost Endowment holders advising them that if their policy was linked to a Mortgage it may be necessary for them to review it. This was sent to all policy holders regardless of whether or not they were linked to a Mortgage.
In this case, it would seem that this letter did not apply to you and so you can probably disregard it. However, Royal Liver does advise that all clients review their financial arrangements with a Financial Advisor or their Home Service Representatives on an ongoing basis.
You are also concerned about the expected level of savings returns when your policy matures.
Poor equity and market performance in the past few years has resulted in less than expected returns recently – and your policy appears to be suffering the same fate. Many life companies, Royal Liver included, have adopted a prudent approach to declaring bonuses in recent years and this is the reason for the reduced expected level of returns.
However, as you still have another 16 or 17 years to run on your policy, it is possible that it may have enough time to recover. You should also note that the death benefit on the policy has not and will not change - this stays the same throughout the policy.
John Geraghty of www.LABrokers.ie