Endowment

A popular method of repaying an interest-only mortgage until its recent disfavour. An endowment policy is a form of life assurance that pays a tax-free lump sum at the end of its term or a guaranteed amount – usually the mortgage debt – in the event of the policyholder’s death. Because of changes in the economic climate since they were sold, many endowments are not now expected to reach their original targets on maturity.