Endowment

[frankiepfc]

Hi ll

I am in the process of cashing in an endowment policy....the company are telling me that there is a penalty for early redemption....is this legal

[platinum]

From what you are saying, I presume you have a With Profits policy (the other type is known as unit-linked and is worth the number of units held multiplied by the value of each unit).

If so, then the answer is "yes" - it will have been in the terms and conditions of the policy at outset.

You MAY have grounds for complaint if you were not told about it by the person who sold the policy at outset but if it was sold since the start of 1995, you will almost certainly have received an illustration in a folder called a Key Features document which will have warned about this is a section entitled "risk factors" near the beginning.

You MAY also have grounds for complaint if the person selling it could have reasonably realised you would not be able to maintain payments or it was clear that the policy was to run over a longer period than you wished to tie your money up for but otherwise you are on an uphill battle.

On a brighter note, many with-profits policies can actually be sold and realise more than their cash in value.

If you are determined to give up the policy - and maintaining them is generally accepted as preferable - look into selling it first.