From: john boyle 
Newsgroups: uk.finance
Subject: Re: endowments - taxable?
Date: Tue, 7 Feb 2006 23:07:43 +0000

In message , JethroUK© 
 writes
>when the endowment policy matures, the target is normally intended to pay
>off outstanding mortgage
>
>but if the mortage was already paid off by the time the policy matures - is
>the target money (the end sum) taxable?

No. The existence or otherwise of the loan is irrelevant.
>
>if so - what defines the difference between the two

Endowments are generally 'qualifying' life policies and if you keep them 
to maturity and dont change them in such a way as to make them 
'non-qualifying' then the proceeds are paid out free of tax to the 
beneficiaries. This does not mean they are 'tax free'; because the 
LifeCo pays tax on an ongoing basis on the investment but at a rate that 
is generally lower than what the beneficiary would have paid if they had 
made the same investments themselves.
-- 
John Boyle