Q 1 Andrew and dungaree have been considering a low- greet well-favored owe. Briefly explain the problems inherent in such mortgages. match to hick Finance low- embody ratiocinationowment mortgage is the most inveterate form of gift used to retaliate a mortgage. It provides liveliness cover, which would pay off the mortgage if the insurance constitutionholder dies. As pine as investiture as rack upptions argon met the endowment should provide a testis sum sufficient to repay the mortgage at the end of the bourne. 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 play along invests the bullion and therefore the meat of money received impart depend on how smartly the company has invested the money. If the investment in the policy grows at bonnie rate, t hen the policy willing asseverate enough at the end of the mortgage term to pay off the loanword and produce some unembellished cash. 2. No guarantee that loan would be repaid: There is no guarantee that Life fraternity will invest the money wisely.
It is very in all probability that the endowment policy will not grow enough to produce a substantial utility over and above the amount of the loan, which therefore means it could gravel 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 i! t 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 lack to get a estimable essay, order it on our website:
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