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Most people who took out endowment policies in the 1980s and early 1990s are facing a shortfall when their mortgage reaches maturity. Research by website Fairinvestment revealed 86 per cent of people have received a warning letter that their endowment policy will not be enough to pay off their mortgage.

It is generally accepted the key to preparing yourself for the shortfall is to seek sensible and practical advice. But what words of wisdom can advisers give to their clients?

There are various options out there for people who have endowment policies in the red. It is simply a case of acting sooner rather than later.

The statistics uncovered by Fairinvestment are backed up by research from the Association of British Insurers in 2006. The ABI found there were about 8m mortgage endowment policies still in existence, with about eight in 10 unlikely to pay off the full mortgage they were taken out to cover.

Gary Rowe, an actuary for Norwich Union, said Fairinvestment's figures were similar to the insurer's own research.

Mr Rowe said: "At the moment, our figures are showing that about 90 per cent of our policy holders are red and only 10 per cent are green, so we are seeing a similar sort of magnitude to the Fairinvestment research."

Mr Rowe said a good starting point for people concerned about their policy would be to look on the FSA website, which lists options for people facing a shortfall.

He said: "Depending on personal circumstances, it is better to start preparing as early as you can for the shortfall and that is where some sort of advice would be sensible."

According to Mr Rowe, it is important people do not leap in and cancel their policy without thinking of the life cover that comes with it.

He said: "For health reasons some people might not be able to get life insurance any longer so the endowment life cover might be all that they have got.

"I do not think people ought to ignore this because many will have taken these things out in their 20s and early 30s, which would make them now in their late 40s early 50s.

"Even though no one really wants to think about it, this is the age when health complications tend to rear their ugly heads."

Mr Rowe said: "The key here is to get some sensible advice, from their bank or an IFA, but there are alternatives, for example making the most of your Isa allowance in order to make sure you have enough money set aside for when your mortgage falls due."

Other ways to make up for a shortfall, listed on the FSA website, are to make changes to the mortgage.

For example, a borrower could switch part of their mortgage and the amount of their projected shortfall to a repayment method or convert their whole mortgage to a repayment method.

Other options include repaying part of the mortgage early by paying off a lump sum, by overpaying each month or by extending the term of the mortgage.

On top of this there is also the option of surrendering or selling off an endowment policy.

Clive Parkinson, chief operating officer of TIS Group, owners of the UK's biggest endowment buyer Absolute Assigned Properties, said: "Endowment policyholders may be considering surrendering their policy as one of the ways to put their finances back on track.

"Consumers need to be aware of all their options, and getting a quote for selling their endowment is completely free of charge. To qualify, it needs to be a with profits policy, taken out before 2002 and have a surrender value of at least £1500."

But should advisers and their clients be writing off mortgage endowments so soon?

Ray Boulger, senior technical manager for London-based mortgage intermediary John Charcol, said the figures released by Fairinvestment were a bit excessive.

He said: "The reason why endowments are not performing is clearly due to investment performance but also linked to the fact that when people took out policies in the 1980s and the early 1990s.

"The assumptions that were made were that investment conditions and interest rates would continue along the lines they had done for the previous few years. Of course since 1992 we have seen interest rates come down and stay relatively low compared to where they were for the previous 30 years.

"The assumptions made are no longer valid and that is the key reason why endowments are under performing."

However, he said there was a bright side to the economic climate of the last quarter of a century concerning mortgage rates.

Mr Boulger said: "The quid pro quo that mortgage rates which were in double figures for longer than 30 years up to the early 1990s have now been in single figures for many years and have been round about the 5 per cent mark for a lot of that time.

"Therefore the mortgages that are being supported by these endowments will be costing an awful lot less, so anybody who was benefiting from the lower mortgage rates could have used the funds that were not being used to pay the mortgage to actually overpay the mortgage.

"Anyone who has done that will have found overall they have come out on top on the basis the over payments on the mortgage would have more than compensated for the shortfall on the endowment."

If customers are facing a shortfall, what is clear is when a borrower faces up to the fact the most sensible thing to do will be to go and visit an adviser.

"The important thing is the adviser can tell the client how much extra they need to pay back on their mortgage each year to accommodate their projected shortfall. Then it is down to what is the most convenient way for the client to do that."