Non profit endowment

As with any endowment policy the sum assured (ie the amount payable on death of the assured) is usually equal to the amount of the loan. The term of the policy is equal to the mortgage term.

Advantages:
• It is low risk.
• A non profit endowment guarantees to repay the mortgage loan at the end of the term or on the death of the borrower.

Disadvantages:
• It is expensive when you compare it to other types of endowment policy.
• It does not provide any extra savings element which means that the policy must run to the end of its term in order to provide sufficient funds to repay the mortgage loan.
• There is no prospect of repaying the loan early and it does not provide any additional funds at the end of the term.
• This type of policy is inflexible and has to be surrenderd if the borrower wants to attain any of its funds.