With-profits endowment policies have underperformed the wider stock market and even cash on deposit, according to the latest survey from the FT magazine Money Management. In some cases, the worst policies have returned less than the premiums paid on maturity – without even taking account of the market value reductions (MVRs) being imposed on investors who want to surrender a policy early.

Over a 10-year term, Money Management found that the worst with-profits endowment, from London Life, returned £5,376 on total monthly premiums of £6,000. During that period, the same £50 a month would have grown to £6,517 in a UK index tracker fund, or £6,874 in the average 90-day notice savings account. Even over a 25-year term, some policies have still underperformed cash, with a Life Assurance of Scotland policy returning £24,502, against £26,817 in the savings account.

Savers wanting to get their money out before maturity face even worse returns, as more companies increase their MVRs. This week, Standard Life became the latest insurer to increase its penalties – cutting surrender values by up to 30 per cent. Last week, Norwich Union announced MVRs of between 13 and 22 per cent, and Friends Provident said its exit charges would be between 5 and 14 per cent.

Some smaller with-profits providers have managed to produce competitive returns. Sheffield Mutual topped the Money Management charts with a return of £12,138 over ten years – annual growth rate of 13.5 per cent.

But Andrew Fisher of independent advisers Towry Law said with-profits policies are not worth considering. “They’re designed to smooth profits for life companies, rather than returns for investors,” he said.