Is an HSA right for your family?A health savings account can provide big savings, but not if your family visits the doctor often.Use of tax creditsAn adoption tax credit can't be used against penalties and interest from back taxes owed, says CPA George Saenz.Claims that boost your insurance ratesCertain types of claims are more likely to boost your insurance rates. Find out which may raise red flags.Life insurance to pay off debtWhen life insurance is used to pay off a loan, it's an exception to the tax-free rule, says CPA George Saenz.Solutions to the health care problemThe presidential candidates offer starkly different solutions to the problem of 45 million uninsured Americans.
was not guaranteed, and in the majority of cases it didnt. Therein lies the formation of the mis-selling scandal; many building societies took great care to explain to their mortgage customers the modus operandi of the endowment system and the many pitfalls which could trap the unwary. Tragically many individual salesmen and some building societies omitted to adequately cover some of the less palatable facts.
This created great distress in some cases; figures produced for 2004 show that almost 7 million endowment mortgages were unlikely to provide sufficient funds to pay off the mortgage debts, leaving less than 2 million which should achieve their objective. Thus the flood tide of the 1980s which saw home owners clamouring for endowment mortgages suddenly became an ebb tide, with endowment holders looking for a way of getting back to the old system, or to one of the newer but more reliable alternatives. Great caution is necessary in this situation.
First of all you need to look carefully at your endowment mortgage to determine its value. If you are still in the early years of its operation, you will find that despite your monthly payments you have a document with very little value. This is because you have been paying the premium for the endowment agreement itself, the interest due on your mortgage loan and life insurance to cover repayment of the loan if you should die before completion.
A very important factor in an endowment is the terminal bonus. You will have received the benefit of annual bonuses along the way, but the terminal bonus is normally the very high value one; it could well provide more than half the final value of the payment which you will receive, but will be lost if you cancel. To make matters more difficult, the value of the terminal bonus is not guaranteed and will not be known until the endowment is fully paid up. It may be that you are in the situation where you will lose money whichever route you take.
If you do decide to proceed with the sale of the endowment, either because you need the money or because you are in the fortunate position where sale would be advantageous, you need to shop around. Certainly you should obtain a sale figure from the company who provided the endowment in the first place, but you are also free to go into the market place for these mortgages and see what offers you can get. It is very likely that the price which you will be offered in this way will be better than that which the original issuer is prepared to allow you.
You will find that different companies have different criteria relating to which endowments they would be interested in buying. For instance, some will not be interested if the sale value is below a certain figure, or may require the endowment to have been operational for a specific minimum period. Realistically you should seek professional help in reaching a decision; a company which has contacts within the Association of Policy Market Makers (which represents companies who deal in endowment trading) will be better placed to find you the best deal. There will be a charge for their expertise, but you should benefit from a better price and save yourself a lot of time, work and worry.
Remember that if you sell your endowment mortgage, you will fairly certainly also be cancelling your accompanying life cover and should ensure that you obtain a replacement policy, preferably before the cancellation takes effect. There is little harm in duplicating your cover for a short time, but there could be very unfortunate results from even the shortest period without cover.
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