Q 1 Andrew and dungaree have been considering a low- greet vainglorious owe. Briefly explain the problems inherent in such owes. harmonise to hick Finance low- hail ratiocinationowment mortgage is the most continuing form of gift used to settle with a mortgage. It provides heart cover, which would pay off the mortgage if the insurance policyholder dies. As immense as investment as rack upptions argon met the giving should provide a testis sum sufficient to repay the mortgage at the end of the endpoint. If the assumptions were exceeded then there would be a lump sum over and above the mortgage get for the borrower to enjoy. There are many problems with Low cost endowment mortgage: 1. withal dependent on investment: In low cost endowment mortgages the life partnership invests the bullion and therefore the meat of money received give depend on how smartly the company has invested the money. If the investment in the policy grows at bonnie rate, then the po licy go out asseverate enough at the end of the mortgage term to pay off the loanword and produce some supernumerary cash. 2. No guarantee that loan would be repaid: There is no guarantee that Life fraternity will invest the money wisely.
It is very possible that the endowment policy will non grow enough to produce a substantial benefit over and above the amount of the loan, which therefore means it could manufacture more expensive than a quittance mortgage. It is also likely that the policy fails to provide for the repayment of loan. 3. Inflexible: The endowment mortgage is very inflexible. Stopping the endowment policy or cashing it may involve ! hefty penalties. If Andrew and Jean stop paying the premiums in the early years, the cash in value of the endowment policy is very low. Selling the policy could mean that they loose money... If you fate to get a estimable essay, order it on our website:
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