In the UK, pressure has increased to ban the sale of endowment policies. Last month, chairman of the City watchdog Financial Services Authority, Mr Howard Davies, said they were unsuitable for most people.

Mr Davies reportedly told industry bosses the tax treatment of endowment policies made them unattractive for all but a few savers. He also highlighted the fact that many people with a mortgage were unaware that endowments were linked to the stock market.

More than 30 per cent of regular premium life policies, including endowment policies, are cancelled within the first four years, Mr Davies is reported as saying. In these early years the majority of policy premiums are eaten up by commission and fees. The endowment mortgage controversy reported in UK papers began when a number of individuals found they could not pay off their mortgages as expected when their endowment policy matured. In the last six months, many UK insurance and financial companies have voluntarily stopped selling endowment mortgages.

Endowment mortgages are legal in the Republic although they are not sold as often as in the past. When tax relief on such policies was withdrawn in the late 1980s/ early 1990s they became a less attractive option, says Ms Jennifer Hoban of the Irish Insurance Federation. A much smaller number of endowment mortgages were sold in the Republic compared with the UK where one in three policies were endowment policies, she said.

The regulatory environment in the Republic is stricter as the Consumer Credit Act requires a regular review of policies by insurance companies. "If a shortfall in the policy is recognised, individuals are advised that they should increase payments," says Ms Hoban. In the UK such reviews were not required until recently, she said.

Policyholders are advised to talk to their insurance broker or company if they would like more information on their endowment policy.