Endowment policies explained

This investment reflects a medium attitude to risk. It could give a higher rate of return than a bank or building society over the long term, from a balanced mix of lower and higher risk assets. But the cash-in value of your investment may go down as well as up and you could get back less than you invested.

We explain how we manage the with profits fund in the Principles & Practices of Financial Management (PPFM) of the RLCIS OB & IB Fund document (PDF - 0.9MB).

Product features

The endowment policy you chose may benefit from additional periodical payments throughout your policy term.


We aim to add annual bonuses to your policy and may also add a final bonus on death or maturity.

Guaranteed minimum payout

We'll pay you at least the amount of your guaranteed sum assured plus any bonuses we have already added.

Child endowments

Certain endowment policies are bought for the sole and exclusive benefit of a child.

More features

Your policy may cover you, your partner, both of you, or your children depending on the type of endowment you bought and what was specified when the policy was taken out. Cover for you and your partner is known as ‘joint life’ cover.

Please check your policy schedule to see who is covered. For joint life policies, we will only pay out one lump sum if either person dies within the term of the policy. Cover will then stop, so the second person will no longer be covered, and there will be no lump sum payable on maturity.

We'll pay a fair value based on the premiums you've paid, plus any investment return we've achieved, less any expenses we've incurred.

If you decide to surrender your policy, you should think about whether you have sufficient life cover to meet your needs. You can contact our Customer Contact Centre on 0345 605 7777 for details of any existing policies you may hold with us.

If you wish to discuss if the level of cover you have is suitable, we recommend that you seek advice from your financial adviser. If you don’t have one, you can use our Find a Financial Adviser tool to find one in your area.

It's possible to stop paying the premiums into your Endowment policy, but this will reduce the value of your policy and any life cover. This means we'll pay less money when the policy ends than if you had continued to pay the premiums.

You may have bought Income Benefit cover with your Endowment Policy. This may have been optional or it could have been automatically built in to the endowment you bought. This benefit provides an additional payout of a regular income if a person covered by the policy dies.

The income will be paid up to the end of the Income Benefit policy term and this could be a different term to that of your Endowment policy. The regular income can usually be converted to a lump sum. We'll let you know if this is possible at the time of claim.

The Income Benefit part of your policy does not have an investment element and so there is no surrender value. Please check your original paperwork for details of the full benefits on your Endowment policy. If you have any questions, please call our Customer Contact Centre.

The endowment policy you chose may benefit from additional periodical payments throughout your policy term. Check your original documentation for details of these payments. We'll contact you when we are due to make these payments.

Many different types of endowments have been sold over the years. Please check your original policy documents for other product(s) features that may apply to your policy.

We supplied a contract for the product(s) to you when you bought the policy. You should refer to this and any contract endorsement which we may have sent you for full information. In the event of conflict between this guide and any contract, the contract will prevail.

Product details

Where is your money invested?

We invest your premiums, together with the premiums of other with-profit policyholders, into the RLCIS OB & IB Fund. We refer to this as the with profits fund.

The fund’s investment strategy is to achieve growth in the value of the fund by investing in a wide range of assets. These include:

  • UK and overseas shares
  • government and other bonds
  • property
  • cash
  • alternative and other investments.

We hold a wide range of assets so that there's less risk to the value of the fund than if we invested mainly in a single type of asset, which could do very well or very badly.

Analysis and performance

You can find performance information for your endowment and mortgage endowment plans in your annual bonus certificates. Please note that Endowment plans taken out before 1994 will not receive bonus certificates. If this applies to you and you wish to receive bonus certificates, please contact us.

The with-profits fund is made up of different types of investments (assets). The chart shows the mix of assets as of 31 December 2015.

Pie chart showing the mix of assets as of 31 December 2015. This image is an infographic and has alternative text available if you are using a screen reader.

Pie chart showing the mix of assets as of 31 December 2015.

  • Gilts: 15%
  • Corporate Bonds: 30%
  • Property: 16%
  • UK Shares: 18%
  • Overseas Shares: 13%
  • Alternative investments: 4%
  • Other: 4%

Our Endowments With Profits Policy review document (PDF - 0.4Mb) will give you a quick summary of the most important features of your Endowment policy.

You can also find out how we manage the with-profits fund on our Principles and Practices of Financial Management (PPFM) page.

Other things to think about

Low-cost endowment policies

If your policy starts with the letters AG, this means that you have a low-cost endowment policy. This product offers a lower cost alternative repayment vehicle for an interest only mortgage, compared to a more traditional endowment policy.

Low-cost endowment policies are made up of two parts:

  • a guaranteed death benefit (usually the amount of the mortgage)
  • a lower basic sum assured.

The lower basic sum assured means the monthly cost to you is lower. Bonuses added to the policy over the term of the plan top up the investment. The goal is that at maturity the bonuses should provide enough funds to repay the mortgage by achieving the target amount.

Red, Amber and Green letters

We've sent you a Red, Amber or Green letter. This letter lets you know if your policy is on track to repay the target amount of guaranteed death benefit.

Please read the factsheets included with this letter. Remember you’ll still need to check that your policy remains on track in future years. Growth rates aren't guaranteed and it may be appropriate to assume a lower growth rate in the 5 years leading up to maturity.

If you need more information about this letter or want to talk about your options, please contact us.

Phone us

You can call us on

0345 605 7777

Lines are open between 8am - 6pm Monday to Friday, excluding bank holidays.