The Money Management survey has shown that over a period of 25 years, the average policy has only achieved an 8 per cent return compared with a return of 9.6 per cent from the UK All Companies sector.
Responding to the survey, Andy Mossack, marketing director of the UK’s largest endowment policy buyer aap, said: "Yet again we are seeing average payouts on with-profit endowment policies fall.
"On the back of surveys and also poorly received bonus announcements from life companies themselves, we are seeing an increase in enquiries made by people looking at reviewing their endowment investments.
"Over a period of ten years, investors are only marginally better off than if their money was held in an instant access account, which is a low-risk investment giving investors instant access to their funds.
"It is therefore no surprise that eight in ten endowment policies in force are unlikely to pay off the full mortgage they were taken out to cover – and with around eight million mortgage endowment policies in the UK, that’s around 6.4 million policies falling short.*
"Many people, disheartened by poorly performing funds, may be considering reviewing their endowment investments and might look at either surrendering their policy or selling it on.
"Any policyholder thinking of surrendering their policy, but deterred by very poor surrender values, should not forget that they can sell their policy in the secondary market through an endowment policy buyer such as aap and potentially gain considerably more than its surrender value."
