We have had a bizarre situation involving one of our saving plans which matures this month.
When we took out the mortage on our home fifteen years ago we were in the process of getting married, so the financial arrangements were sorted out in our individual names and then when we exchanged and completed we were married with the same surname.
Like most home buyers at the time we were told that an endowment mortgage was the way to go, convinced that at the end of the mortgage we would be able to have money to pay off the house and enough left over so we could wipe our bottoms on £5 notes for the rest of our days. Well perhaps that is an exaggeration, but like many people that dream became a nightmare fairly quickly.
The underlying premise with endowment policies being used to repay a mortgage, is that the rate of growth of the investment will exceed the rate of interest charged on the loan. When we took out our mortgage, endowment mortgage selling was at its peak, the anticipated growth rate for endowments policies was high (7-12% per annum). However the change in the economy toward lower inflation made those assumptions look very optimistic (almost fraudulent).
When we reached the fifth year anniversary review of the policy it was clear we would be heading to a substantial short fall (as were many others), and so were advised to take out a second savings plan which would gives us a lump sum payment in 10 years which we could use to top up the endowment if growth hadn’t picked up, if it had we would have money to spare. So we did, the policy being with the same company as our endowment (we were young and naive okay!!)
Well 10 years down the line that savings plan is due to payout (and yes you’ve guess it, it’s growth has been somewhat stunted) During that time we have moved the mortgage to a flexible repayment one with another lender but kept the endowment going as life assurance.
Well this is the problem, the endowment is in our married names, the maturing savings policy was taken out 5 years after we were married so is obviously in our married name but before they will release the funds they need to see our marriage certificate? If we refused to send it to them they would refuse to payout! WTF?
We have refused to send it, we am not in the habit in sending important and personal documents in the post with the inherent risks of damage and/or loss. We would if we could see a valid reason, but in this case we cannot! They have clearly acknowledged that the policy was taken out in our married names, but because of ‘linkage’ to the original endowment which was originally taken out in our maiden names their security systems demands they see the marriage certificate. However as was pointed out the endowment is now in our married names and for that to have happened they must have already seen the appropriate documentation. (A classic Kafkaesque nightmare)
Numerous phone calls and threats of the involving the Financial Ombudsman seem to have done the trick and they have now reluctantly relented and will be releasing the funds at the end of the month. Some of it at the moment is earmarked for a nice new computer!