Nic Cicutti's Personal Finance column

LIKE MILLIONS of home buyers in the Eighties, I took out a with- profits endowment to pay the capital off after 25 years. I expect it to deliver a tidy sum when it matures in about nine years' time.

I barely notice the money leaving my account now but at the start the monthly payments were a huge burden, taking almost 10 per cent of my salary.

I often considered surrendering the policy back to the life insurance company. It was more luck than judgement that I did not. Now I'm past the half way mark it makes no sense to stop.

Many of my fellow borrowers surrendered their policies for the usual range of reasons; unemployment, divorce, or they simply had no further need. When they did sell, they often found the policy was barely worth what they paid in.

In truth, endowments are a "clunky" way of saving to buy a house. They need a long-term commitment which defies the daily reality of most people's lives. They are completely inflexible, levy a fortune in charges (to pay vast commissions to those who flog them) and their fiendishly complex structures make it impossible to work out exactly what you are likely to receive upon maturity and why.

Anyone with half an ounce of imagination could have worked this out, particularly the life insurance company executives who were busy marketing these products to all and sundry. All that didn't stop armies of sales staff with negligible training scouring the country to find suckers like me to buy their rubbish.

That is why I feel little sympathy for insurers who, if rumours are to believed, face police inquiries into whether the sale of many of these policies were tantamount to fraud. They deserve all they get.

What also concerns me is the approach of our financial watchdogs. There was no effective regulation of life insurers prior to the late Eighties and it is now recognised that the weak regulatory regime between 1988 and 1994 allowed mis-selling on an epic scale. But from 1994 onwards, we had the Personal Investment Authority, supposedly a better class of watchdog. During that time, endowment sales continued at an alarming rate. Even today - with a new regulator, the Financial Services Authority, in place - they are still the preferred means of repayment after 25 years for up to one third of new borrowers.

This is frightening. Is it not possible to fix it so advisers cannot sell an endowment unless they can show their client's circumstances are unlikely to change in the next 25 years? I can think of just two categories of people, to whom this might apply: clergymen and life prisoners. Any other suggestions?

Voices
On the last day of campaigning before the polling booths open, the SNP leader has written to voters in a final attempt to convince them to vote for independence
scotland decidesIs a huge gamble on oil keeping First Minister up at night?
Arts and Entertainment
Rosalind Buckland, the inspiration for Cider with Rosie died this week
booksBut what is it like to be the person who inspires a classic work of art?
Life and Style
techApple has just launched its latest mobile operating software – so what should you do first?
News
A male driver reverses his Vauxhall Astra from a tow truck
newsThe 'extremely dangerous' attempt to avoid being impounded has been heavily criticised
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
Life and Style
ebooksA superb mix of recipes serving up the freshest of local produce in a delicious range of styles
Life and Style
ebooksFrom the lifespan of a slug to the distance to the Sun: answers to 500 questions from readers
Arts and Entertainment
Lionel Messi in action for Barcelona
filmSo what makes the little man tick?
Arts and Entertainment
tvReview: An undercooked end (spoiler alert)
News
i100
Arts and Entertainment
Pharrell dismissed the controversy surrounding
musicThe singer said 'the last thing I want to do is degrade'
Sport
Cesc Fabregas celebrates his first Chelsea goal
footballChelsea vs Schalke match report
Arts and Entertainment
Toby Jones (left) and Mackenzie Crook in BBC4’s new comedy The Detectorists
tvMackenzie Crook's 'Detectorists' makes the hobby look 'dysfunctional', they say
Life and Style
fashion

Olympic diver has made his modelling debut for Adidas

News
i100
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs General

    Maths Teacher

    £110 - £200 per day: Randstad Education Leeds: Secondary Maths Teacher for spe...

    Maths Teacher

    £90 - £160 per day: Randstad Education Leeds: Secondary Science Teacher (mater...

    Maths Teacher

    £110 - £200 per day: Randstad Education Leeds: Secondary Maths Teacher for an ...

    Maths Teacher

    £22000 - £37000 per annum: Randstad Education Leeds: A West Yorkshire School i...

    Day In a Page

    Mystery of the Ground Zero wedding photo

    A shot in the dark

    Mystery of the wedding photo from Ground Zero
    His life, the universe and everything

    His life, the universe and everything

    New biography sheds light on comic genius of Douglas Adams
    Save us from small screen superheroes

    Save us from small screen superheroes

    Shows like Agents of S.H.I.E.L.D are little more than marketing tools
    Reach for the skies

    Reach for the skies

    From pools to football pitches, rooftop living is looking up
    These are the 12 best hotel spas in the UK

    12 best hotel spas in the UK

    Some hotels go all out on facilities; others stand out for the sheer quality of treatments
    These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

    Widespread fear of Isis is producing strange bedfellows

    Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
    Topshop goes part Athena poster, part last spring Prada

    Topshop goes part Athena poster, part last spring Prada

    Shoppers don't come to Topshop for the unique
    How to make a Lego masterpiece

    How to make a Lego masterpiece

    Toy breaks out of the nursery and heads for the gallery
    Meet the ‘Endies’ – city dwellers who are too poor to have fun

    Meet the ‘Endies’ – city dwellers who are too poor to have fun

    Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
    Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

    Ian Paisley’s decision to make peace with his IRA enemies

    His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam
    'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

    'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

    Exclusive extract from Janis Winehouse's poignant new memoir
    Is this the role to win Cumberbatch an Oscar?

    Is this the role to win Cumberbatch an Oscar?

    The Imitation Game, film review
    England and Roy Hodgson take a joint step towards redemption in Basel

    England and Hodgson take a joint step towards redemption

    Welbeck double puts England on the road to Euro 2016
    Relatives fight over Vivian Maier’s rare photos

    Relatives fight over Vivian Maier’s rare photos

    Pictures removed from public view as courts decide ownership
    ‘Fashion has to be fun. It’s a big business, not a cure for cancer’

    ‘Fashion has to be fun. It’s a big business, not a cure for cancer’

    Donatella Versace at New York Fashion Week