Winterthur Life has stated that the withdrawal of its endowment product will “make life easier” for brokers in the light of the continuing bad press surrounding this type of contract.
The product was being sold through brokers operating from Winterthur’s high street network of over 1,000 tied estate agency offices.
Despite a belief held by many that the endowment still has a role in the mortgage market, Garry Hurry, marketing media manager at Winterthur Life, said that it was becoming more difficult for brokers to portray endowments in a positive light, irrespective of the contract’s benefits.
He said: “Most advisers understand our decision as many have come under unjustified criticism just for having the product. This move will make life easier for them.
“Our brokers will now focus on mortgage protection and we believe they will still be able to meet their clients’ needs and maintain their income.”
However, broker Rod Murdison, proprietor at Murdison & Browning, said that it is unlikely that brokers used to selling endowments will welcome the move as they will now have to sell more protection concepts to clients to maintain income.
He said: “I do not imagine brokers will relish moving away from their comfort zone. Protection products are a more complicated sale. If they sold a repayment mortgage instead of an endowment with a term life assurance policy, their commission would be a third of what it was.”
He added that as long as endowments are explained properly, they continue to have a role for certain borrowers.
Following the withdrawal of the contract, Hurry said that his company plans to “radically improve its protection portfolio”. It has already cut term rates by 25% and has included free terminal illness benefit. As of August, it will also be linking critical illness to its term assurance product range.
Marie Maher, communications manager at Winterthur Life, said that its decision to withdraw the product was not an easy one.
She said: “We have seen a gradual move away from endowments over the last 12 months. Winterthur Life pioneered the endowment and for certain people it is the right product. It is a shame they have had such bad press. Consumers have decided it is no longer an attractive product and we are responding to market movements.”
According to the Association of British Insurers, sales of endowments are continuing to plummet, falling from 133,000 in the final quarter of 1999 to 82,000 in the first quarter of 2000.