Why sell an
endowment policy?
Many
policyholders want to sell their endowment because it has performed badly or
they want to raise money now. Often the surrender value, obtained if the policy
is surrendered to the insurance company, will be too low. An alternative is to
sell your endowment to a company, or broker, that buys secondhand endowment policies.
It is
important to obtain a number of quotes before selling an endowment policy so
that you can obtain the best price.
Which
endowment policies can be sold?
There are
different types of endowment policies and not all can be sold onto the secondhand
or Tep market. If you have a type of unit linked endowment you will not be able
to sell the policy, although other options may be available.
If you have
a with profits endowment then you are likely to find a number of companies will
offer to buy your policy. The quotes you receive should be significantly
greater than if you surrendered the endowment to the insurance company. They
could be as much as 10-15 percent more in some cases.
It is
important to note that you will probably only be able to sell an endowment if
it has been running long enough. For example, members of the APPM can only buy
an endowment if it has been running for one third of its full term or five
years, whichever is longer. You are also unlikely to be able to sell an
endowment policy with surrender value of less than £3000, although the APPM
says that "approximately £1,000 minimum surrender value is required"
How quickly
will I get paid?
After
accepting an offer for your endowment and returning the necessary paperwork,
payment could be received in as little as four weeks, although it can often
take longer.
Should I
sell my endowment policy?
Only the
policyholder can decide if its worth selling their endowment and should consult
a financial advisor about their options.
Alternatives
to selling an endowment include making the policy "paid up". This
means that the policyholder stops paying the premiums and accepts they will
receive a smaller amount when the policy matures. It is also possible to take
out a loan against the value of the policy.
Remember that you lose the life insurance cover
if you make the policy paid up or surrender or sell the endowment.
