Bad endowments
Sir: I am afraid that Christopher Fildes (City and Suburban, 27 April) and Kate Mortimer (Letters, 4 May) have both missed the point about 'Best Advice' and Home Loans.
Polarisation is irrelevant; the argument is not about who provides the endowment policy — be they 'tied' or 'independent' but about whether the house purchaser 'That's another football team without a manager.' should — have an andowment policy at all. The correct advice is that if you have no dependents you don't need life insurance; if you have, all you need is a mortgage protection policy costing you about £6 per month for a £60,000 mortgage; or, if you are likely to be really well-heeled, you could take out an interest-only mortgage and pay off the capital with a Personal Equity Plan (PEP) Savings Plan.
Needless to say, the vast majority of house purchasers will be fixed-up (sic) with endowment policies. This is because life insurance companies do not know what else to sell and their agents are greedy for the large commissions payable. (Guess who pays?) All classes of intermediaries are guilty of not providing 'Best Advice', including my fellow Fimbra members, but most particularly building societies, banks and estate agents (usually owned by life insurance companies). The Securities and Investments Board just hasn't got a clue.
Roland Fernsby
Financial Practitioners, National Westminster Chambers, Salisbury Square, Hatfield, Hertfordshire
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