Should we continue with our endowment policy?

Q My wife is disabled and I am her carer. We originally had an endowment mortgage that was going to fall short. However, my wife recently received a settlement with regards to her disability (which was due to a road traffic accident) which allowed us to purchase a larger property for her needs and left us without a mortgage.

We sold our other house and paid off the mortgage with the proceeds. This left us with a Northern Rock endowment policy which we still pay. We would like to know, now that we have no mortgage commitments, should we keep the policy going with the long term in mind (it still has another 15 years or so to go) or should we sell it?

Neither of us has a pension, but we do have life insurance. I do have a superannuation pension that was frozen when I left my employment with the NHS. It only amounts to 10 years. I would like to invest it somewhere but have been told that I cannot have access to it until I retire. I am now 46.

TC

A The endowment policy will not be managed by Northern Rock, who l assume provided you with a mortgage and recommended a repayment policy run by an insurance company. As the mortgage has been paid off the insurance policy has to be judged on its merits purely as a savings scheme, with life cover attached.

As you already have life insurance cover, l believe you should consider surrendering the policy now, since the charges will eat into any gains and, if it is invested in a with-profits fund, returns are likely to be very meagre. Ask the insurance company to give you a surrender value and then try shopping around (on the internet) in the traded endowment policy second-hand market.

I don't think you will benefit from transferring your NHS pension elsewhere, since personal pensions are finding it very hard to compete with the returns provided by final salary schemes and any transfer always costs money. Why not invest the premiums currently paid into the endowment policy in an alternative investment such as an Isa or a stakeholder pension policy?