Many homeowners took out endowment policies expecting them to pay off their mortgages but have recently been alarmed to discover that this will not be the case. Your endowment could be thousands of pounds off target with no way of you finding this extra cash.

What Can I do?

This is where endowment compensation - or endowment redress - is used. But how much compensation could you receive?

The insurance companies aren't paying compensation according to how much of a shortfall you are predicted. If your claim is upheld, the endowment company is likely to make you an offer for compensation and an offer to cash in the policy. Look at this carefully and speak to an independent advisor to find out what is best for you.

What Else Does An Endowment Policy Cover?

One important point to remember is that part of your endowment payments have included a payment for life insurance. If you cash in your endowment, then you will need to arrange a new policy to replace the endowment.

Also, looking back over the period when you have been paying for the endowment, some of the payments have been used to pay a life insurance.

How Will The Insurance Calculate Compensation?

So how much compensation could you receive? The insurance company will look at the monthly payments you have made into your endowment policy. From this they will make an allowance to account for the life insurance aspect.

Then they will also look at how much interest you have been paying each month to keep the mortgage level. From these complicated figures, they will work out if you had instead been sold a repayment mortgage, how much would you have paid off. Then they compare this to how much your endowment is worth now if it was cashed in.

In short, if by paying the monthly payments you could have paid off more of your mortgage than your endowment has earned, then the difference is the compensation you are entitled to.

Was My Offer Correct?

So how do you know whether your offer of compensation is correct? That's where a specialist solicitor helps you. Not only will they deal with the paperwork and any appeals for you, they will also check you are given the maximum compensation. After all, they are being paid a percentage of the compensation (not including the cash in value) so the more compensation you receive, the more they receive.

Where Now?

To find out whether you can claim, or to speak to a solicitor without any obligation, leave your contact details or take the 60 second test. It only takes a minute to find out the answer or you can just leave your contact details and someone will call you back.

Keith Lunt runs several financial sites including http://www.endowment-claim.org.uk You are welcome to reprint this article as long as all links are included and work.