Taking back presents ... travel cover ... endowment policies. Your everyday financial queries answered

In most years there is one member or other of my family who gets a Christmas present that needs to be taken back because it is faulty or is unsuitable. Sometimes I have had to insist on a swap or refund quite forcefully, but I've never been quite sure what the legal position is. MH London

The first thing to say is that there is usually a difference between something being unsuitable and something being faulty. If something you buy at any time of the year is unsuitable you can't normally demand a refund if it is basically fit for the purpose for which it was sold. That said, many shops will give a refund, or at least give a swap or credit note, as a matter of goodwill.

The issue of faulty goods is somewhat different. The general rule is that if something does not fit its description, or is not of satisfactory quality, you have a right against the shop (and not against the manufacturer) for a full refund - not a swap, credit note or a repair. You must bring the goods back very quickly. The same rights, of course, apply to anything you buy in the January sales, except where something which is marked down in price is sold on the basis that it has a specific fault which has been pointed out.

Curiously, sale of goods rights are, technically, lost with presents. In other words, the recipient of the present cannot demand a refund. If you are dealing with a retailer of whose reputation you are unsure, it may be best for the original buyer to sort out the problem. They should not mention that the item had been bought as a present.

Don't forget the valuable legal protection for goods bought with a credit card (though it does not come with debit cards or charge cards). Provided the goods cost at least pounds 100 (even if you made only a part-payment of less than pounds 100 with your credit card) your legal rights can be enforced against the retailer or the credit card company. In other words, you can ask the credit card company for a refund.

I've read that instead of buying travel insurance for each holiday, a policy lasting a full year gives better value. I've also been told that some policies give inadequate cover for skiing trips. What sort of policy is best?

JB, Lancashire

It is true that an annual travel insurance policy can work out much better value for people who take two or more holidays a year. This also gives the added advantage of covering the odd weekend away in Amsterdam, or a day trip to Calais.

Holiday insurance is essential for all foreign trips - even for a short hop across the Channel. Otherwise, you may face big bills if you are unexpectedly taken into hospital.

It is true that some policies may give inadequate cover for skiing holidays (and, indeed, other holidays which involve certain sports and hazardous activities). There are, however, suitable polices on the market and many annual policies include cover for winter sports or will offer it as an add-on. You should check how much skiing cover is given and read the small print. There may be a time-limit of 17 days a year on annual policies, and this could prove inadequate for someone who takes two skiing holidays. You should also get a policy which covers all the areas of the world you are likely to visit. And if you are an experienced or simply adventurous skier, make sure you get a policy which covers off-piste skiing. Companies which may be worth getting details from include Club Direct (01243 787838), Columbus (0171 375 0011), Inter Assurance (01252 717766) and WorldCover Direct (0800 365121).

How can I find out which endowment policy is likely to turn in the best investment performance and produce the biggest lump sum when it matures?

DA, London

Are you really sure you want to take out an endowment policy? A personal equity plan will offer more tax breaks and should prove to be more flexible. An endowment also includes life insurance which will hold back your investment returns.

However, if you are sure that you want an endowment policy and will keep it going for its full term (which is the way to get best value from such policies), the starting point is the projected return which a company is obliged to give. In fact, all life companies have to use the same rates of return to show what a policy might finally be worth. So to that extent, projections have to be taken with a pinch of salt.

But these projections do take account of a company's charging structure. So you can see which companies will charge the most given a set rate of return. The apparently higher charging companies may justify their charges by superior investment performance - but the higher the charges, the harder it becomes to outperform the competition.

Then you should look at past performance. Bear in mind that past performance is no guarantee of future performance. Be wary of past performance figures and league tables given by the companies. They may choose the most appropriate dates to show them in the best light.

An objective analysis of past performance is contained in a new monthly publication, Life & Pensions & Unit Trusts Moneyfacts. It's aimed primarily at financial advisers. You would have to subscribe for a whole year at a cost of pounds 38.50. But since the difference in endowment policy maturity values can be thousands of pounds on the same monthly premium, spending some money to get the right policy should be worthwhile. For details, write to Moneyfacts, North Walsham, Norfolk, NR28 OBD or call 01692 500677.

q Write to Steve Lodge, personal finance editor, Independent on Sunday, 1 Canada Square, Canary Wharf, London E14 5DL, and include a telephone number.

Do not enclose SAEs or any documents that you wish to be returned. We cannot give personal replies and cannot guarantee to answer every letter we receive. We accept no legal responsibility for advice.

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