Closure Date: 31 March 2005/30 April 1998
These plans are designed to help you repay an interest-only mortgage.
You invested a regular, fixed amount into the Fund for a term of between 10 and 30 years. In return we guaranteed to pay you a lump sum at the end of the term. We may also add bonuses to reflect investment performance over the period.
At the outset you selected a target amount which was usually equal to your mortgage. The ‘low cost’ guarantee was less than your target amount that you set when you took out the plan. This means your plan relied on investment performance to make up the difference between the low cost guarantee and the target amount but this was not guaranteed. The Minimum Low Cost Endowment has a lower guarantee than the Low Cost Endowment.
Every year, with your performance update, we’ll highlight using a colour code whether your plan is currently on track to reach your target amount. The colours are red (not on target), amber (may not be on target) and green (on target). If you die before the end of the term, we’ll pay a lump sum of at least your original target amount.
We’ll contact you shortly before the end of the term to let you know the value and explain your options.
If you increase your mortgage, you’ll need to consider how you’ll repay the additional amount.
You can stop saving at any time and take the surrender value – if you do so, you may not get back what you put in. There may be tax to pay - it depends on when you cash in, the cash in value and if you need to pay higher rate tax at that time.
For more information please read the following FAQs:
What do the red, amber and green ratings mean?
If you’re using an endowment plan to pay off your mortgage, we provide you with regular statements and accompanying letters which are colour-coded to help you review whether your plan is on track to repay your mortgage. These colour-coded ratings are linked to the projected growth rates we use to estimate what your plan could be worth when it matures:
Red means there’s a high risk that your plan won't pay out enough to cover your target amount, and that you should consider taking action to make sure you’ll be able to repay the whole of your mortgage. You can make up a shortfall in a number of different ways. You'll find these explained in detail in the online Money Advice Service guide.
Amber means there’s a significant risk that your plan won't pay enough to cover your target amount, We strongly suggest you consider taking action to make sure you’ll be able to repay the whole of your mortgage loan.
Green means that your target amount will be achieved if our investments continue to grow at a reasonable rate. It means that your plan is currently on track to achieve at least your target amount, but this may change in the future. A green letter is no guarantee that your plan will pay your target amount when it matures at the end of the term.
It’s a good idea to check your statement carefully each year, even if your plan has been on track so far. Please bear in mind that the projections we send you are no guarantee of what you’ll receive when your plan matures – you may get back more or less than the amounts estimated in your statement.
If you’ve told us that you’re no longer using your plan to pay off your mortgage, we won’t send you a colour-coded rating letter – just a yearly statement.
Do you need to know if my plan is assigned to a mortgage lender?
Yes. Please let us know any assignment changes by phoning our Customer Relationship Centre on 01543 441 630. Assignment means that when your plan becomes payable, we’ll pay the plan proceeds direct to the assigned third party, typically this is the lender who has provided you with your mortgage. So we need to make sure our records are up to date. On your yearly statement you’ll see the assignment details we currently have for you - if these have changed, please get a notice of reassignment from the new third party and send a copy to us so that we can update our records.
Do you need to know if I'm no longer planning to use my plan to pay off a mortgage?
Yes - if the purpose of your plan has changed, please let us know. This will allow us to tailor the information we send to you. We’ll continue to send you a yearly statement, but stop sending you a colour-coded risk warning.
Should I surrender my plan early?
With-profits plans, like your Police Mutual Low Cost Endowment mortgage plan, are long-term contracts. Cashing in before the end of the term may not be in your best interests and remember you will also lose the life cover included in your plan, which may be more expensive to replace as you get older.
If you do choose to surrender your plan early, we’ll calculate its cash-in value at the time. The amount you receive will depend on the investment return and the amount you’ve paid in, taking into account our charges, expenses, tax, our smoothing policy and the cost of life cover.