What is a woekerpolis (endowment scandal policy)?

The key points at a glance

The term 'woekerpolis' (literally 'usury policy') became widely known largely thanks to the TROS television programme Radar, which covered this type of insurance product extensively and put the problem on the national map. From the time this form of insurance was introduced in 1993 until it was no longer offered in 2008, around 6.5 million of these policies were taken out in the Netherlands. The combined value of all those policies amounts to approximately 100 billion euros.

1. In theory, a financial winner

The idea behind the woekerpolis was that the premiums paid by policyholders would be invested, so that, thanks to strong stock market returns, a capital sum would be built up by the end of the policy term. This could then be used, for example, to pay off a mortgage in one go. In theory, the financial outlook with these policies looked very rosy. However, past performance is no guarantee of future results, and that proved to be very much the case with this type of policy.

2. The problem with the woekerpolis

Stock markets don't only go up, of course. Share values can fall too. Many woekerpolis holders discovered this when it turned out that after years of saving, returns were far less favourable than expected and their pot of money was growing much more slowly than the insurance companies had suggested. Partly due to a complex web of charges that the insurers levied for managing the investments, only 70 to 80 percent of the premiums actually ended up being invested. This made it practically impossible to achieve the promised returns by the end of the policy term. Because of the excessive profits the insurance companies made on these products, they eventually became known as 'woekerpolis' (usury policies).

3. Collective new agreements with major insurance companies

Over the years, both individuals and consumer organisations, such as the Stichting Verliespolis and the Stichting Woekerpolisclaim, took legal action to force insurance companies to find solutions for the financial harm caused by these policies. This led, among other things, to a number of major insurers reaching an agreement with the two foundations mentioned above. That agreement set a cap on the charges that can be applied: for policies with an annual premium of up to 1,200 euros, charges may not exceed 2.85% per year, and for policies with an annual premium above 1,200 euros the cap is 2.45% per year. In addition, the insurance company pays out a compensation amount at the end of the policy term for a portion of the charges that were withheld.

4. Alternatives to your woekerpolis

If you still have a woekerpolis, you're not obliged to see it through to the end. If you want out before the end date, you have a few different options. First, you can make the policy premium-free. This means you stop making new contributions, but the end date of the policy remains in place. You're still entitled to compensation for the withheld charges. The second option is to surrender the policy, so the surrender value is paid out to your bank account. The third option is to switch your woekerpolis to a different financial product with lower charges. If you go for one of the last two options, bear in mind that they may have tax implications for you. Was your woekerpolis linked to your mortgage? Calculate whether refinancing your mortgage works out cheaper once you change the policy.