One of the biggest criticisms against endowments is their inflexibility. Because the vast majority of with-profits endowments involve heavy up- front charges, anyone who wants to cash them in during the first few years may receive back less than they have actually paid in.

Recent figures from the Personal Investment Authority, the frontline watchdog, suggest that up to 30 per cent of policyholders may surrender their policies within the first three years.

Millions of people forced to do so for perfectly legitimate reasons, typically because of unemployment or divorce, have lost out. Worse, critics claim that high payouts given to those whose policies go through to maturity are only possible because of the high drop-out rate in the early years.

The heavy criticism has forced many companies to improve the amounts they pay out to those who surrender policies in the early years. Andrew Black, marketing manager at Standard Life, an insurer which for years has paid out some of the highest amounts to people who cash their policies in early, says: "It is true that some contracts are inflexible, but it's also the case that many people surrendered when they did not need to, such as when they were moving house."

Standard Life is one of a small group of companies attempting to offer more flexible endowments, which allow contributions to be raised or lowered and where reviews every five years allow those who are saving to pay off a loan to see how close they are to meeting that target.

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