Insurance Policy

[Ric.ror]

My friend recently told me a policy had matured and she had a little bonus.
It might seem incredibly stupid but I don't really understand
I thought you paid insurance and it paid out when you died

[factor-fiction]

Some pay out at the end of a certain period. We had life policies linked to our mortgage and they matured and paid out

[SlackAlice]

https://www.moneyadviceservice.org.uk/en/articles/endowment-policies

[Postdog]

Roll on the end of 2015 I say!

[Peter Pedant]

It sounds like an endowment policy

These were and incredibly good deal and became an incredibly bad deal, and the companies were forced at length to pay out peanuts for mis selling.

The endowment policy 'grew' at a pretty crap rate actually - in times of inflation it could be up to 10% a year and when it matured there was factored in a bonus which could be up to 20% of the value of the pay out. Recently the bonus values have been as low as zero

Your friend Ric ror had been told I think that the bonus rates were low and unlikely to rise for this years policy and may therefore have done better than she expected.

You dont hear of endowment policies now and I am not surprised. The majority of mine are coming in at 80% of advertised value or less

Not every investment makes you money and ho hum one has to learn.....

[Postdog]

I had to move and luckily my new house was bought with the profit from the sale of the old, even with paying the outstanding mortgage. The policy amounts were huge at the start of the policy but are effectively small change now so I kept them going. My policy may not pay out what was promised bonus wise but it will all be mine.

[fairycakes69]

Was it an insurance policy? I had a saving plan with Sunlife for 20 years, paid £10 a month for a year, then increased by £2 every year till it was £20. Then that per month till time was up. Got a really good pay out. Pity they don't do it anymore.

[bhg481]

Insurance protects you against something which MIGHT happen.

Assurance protects you against something which WILL happen.

Hence there are 2 sorts of Life Policies, Life Assurance and Life Insurance.

If you take out a 25-year mortgage, you MIGHT die within the 25 years, so you have a LIFE Insurance policy. If you don't die within that period there is no payout EXCEPT that some policies are linked to a savings scheme (endowment policies) when you get a return at the end of the period, provided that you didn't die.

If you want to make sure your dependants are financially OK after your death you take out a LIFE Assurance policy, because you WILL die sometime and then your policy pays out.