Life Insurances a contract between the policy holder and the insurer, where the insurer promises to pay a designated beneficiary a sum of money upon the death of the insured person. More info will appear here very soon.

Is a contract between the policy holder and the insurer, where the insurer promises to pay a designated beneficiary a sum of money upon the death of the insured person. More info will appear here very soon.

Is a contract between the policy holder and the insurer, where the insurer promises to pay a designated beneficiary a sum of money upon the death of the insured person. More info will appear here very soon.

During the eighties and nineties, taking out endowment policies was a popular form of investment. Since then, disappointing returns from insurance funds coupled with lifestyle changes (redundancy, divorce, mortgage changes, etc.) have led many people to consider whether to surrender (cash in) their endowment policies back to their insurance company. The option of selling endowment policies has also caused many worried policy holders to prick up their ears and consider their options.

The problem with endowments
If you are an existing endowment policy holder who took their policy out in the nineties, you may remember the projections of 7.5 % mid-range growth over the term of the endowment (more in the eighties). If, like many others, you took out your endowment chiefly to pay off the sum remaining on an interest-only mortgage, the future looked rosy.

Unfortunately, the stock market has not behaved as projected, and endowment holders have had to endure year upon year of reduced bonuses, becoming anxious that they will experience a shortfall. Some policy holders, especially those who have experienced redundancy or other changes in circumstances, have considered surrendering or selling endowment policies.

Who would buy an endowment policy?
The reason selling endowment policies has become so lucrative is largely due to foreign countries, particularly Germany, who tend to invest heavily in insurance funds, seeing them as low-risk, long-term investments. Market makers have obliged by sourcing policies from an ever-increasing range of life offices and the demand has pushed prices up.

Surrender or sell?
People’s circumstances vary and ultimately independent financial advice is needed to determine whether someone should sell their endowment policy. There are other options: policy holders can choose to borrow against their investment, auction their policy or make it ‘paid up’, whereby they stop contributing in return for a lower payout at maturity; penalties may apply if they take this option. However, selling endowment policies is usually preferable to surrendering it to the original insurance company, simply because the amount received can be substantially higher than the surrender value.

How do people go about selling endowment policies?
To start with, to qualify for the endowments market, your policy must be of the ‘with-profits’ type. If you are unsure what type of endowment you have, check your statement; if you receive bonuses in sterling and there is no mention of units you have a ‘with-profits’ policy. Eligible policies generally need to meet minimum running time and/or surrender value (typically £1,500) to be of value.

Endowment policies are sold on the TEP (or SHEP) markets (the traded or second-hand endowment policy markets). If you are thinking about selling, you should ensure the TEP market makers you choose are APMM members, since this guarantees they are FSA regulated (APMM have a helpline for queries about this). Alternatively, there are endowment market brokers who can look for the best deals on your behalf.

An important consideration to make before selling
Of course, as well as an investment, you must remember that an endowment policy is ultimately a life assurance product. Therefore, bear in mind that selling endowment policies also results in losing out on a lump sum in the event of your death.

To sum up, endowment policies are a valuable insurance product, generally providing low-risk, long-term investment. However, underperforming stock markets and low inflation rates, often combined with changed family circumstances, are tempting many policy holders to consider surrendering their endowment. Selling endowment policies is another option for those who want to get a better price for their policy.

Endowment policies can be fantastic ways to save money for the long term under a structured plan, and to give you a strong return in a tax efficient manner.
Endowment policies are generally for a term of between 10 and 25 years. They are paid into by the policy holder over an agreed period in order to build up a lump sum, which can be used for any purpose once the endowment is ‘cased in’. Endowment policies are typically linked to an interest-only mortgage, with the policy holder paying off the interest owed on the mortgage and the endowment used to pay back the loan itself. Endowment policies very often contain a life assurance element, for example insurance which will cover repayment of the mortgage in the event of the policy holder dying before the end of the term of the endowment policy. Alternatively, an endowment might be linked to life insurance, so that your loved ones are left in a secure financial position should you die before the endowment term is complete. The premium payable is calculated based on the projected growth rate of the fund, the investors’ age and length of term of the endowment policy.

A typical with profits endowment policy usually returns you a profit in one of two ways.
First, by annual bonuses which the insurance company may add to your policy, representing a percentage of the amount of growth made by the endowment fund, which has been built up during the endowment term so far. Of course the amount of return depends on market conditions and the kind of endowment policy you have taken out in terms of risk, but they very often pay out a reasonable rate of return.  Second, the life assurance part of the contract may contain provision for a terminal bonus, a separate amount of money which is added when the policy matures and is cashed in. This may depend on how long you have held the policy for, and the amounts paid in, as well as market conditions and the growth of the fund.

Another type of endowment policy is the unit-linked endowment.
This offers a choice for the endowment policy investor from a range of the unit-linked funds held by the insurance company, from stocks and shares to all types of equity and profit funds. Of course that means that there is an element of risk, depending on the strength of the stock markets and investments you choose. That said, you are likely to be able to switch your funds to move your money to different types of asset or stock markets in order to ensure continuous growth of your endowment policy.

Endowment policies are subject to extensive regulation.
Nevertheless you should always take careful advice before entering into a policy, to find out whether the type of endowment is right for you, the potential liabilities you could face if you fail to keep up payments and the amounts of growth and bonuses which you can expect to receive. It is always recommended to take independent advice before taking out an endowment policy.

Who would buy an endowment policy?
The reason selling endowment policies has become so lucrative is largely due to foreign countries, particularly Germany, who tend to invest heavily in insurance funds, seeing them as low-risk, long-term investments. Market makers have obliged by sourcing policies from an ever-increasing range of life offices and the demand has pushed prices up.

Surrender or sell?
People’s circumstances vary and ultimately independent financial advice is needed to determine whether someone should sell their endowment policy. There are other options: policy holders can choose to borrow against their investment, auction their policy or make it ‘paid up’, whereby they stop contributing in return for a lower payout at maturity; penalties may apply if they take this option. However, selling endowment policies is usually preferable to surrendering it to the original insurance company, simply because the amount received can be substantially higher than the surrender value.

How do people go about selling endowment policies?
To start with, to qualify for the endowments market, your policy must be of the ‘with-profits’ type. If you are unsure what type of endowment you have, check your statement; if you receive bonuses in sterling and there is no mention of units you have a ‘with-profits’ policy. Eligible policies generally need to meet minimum running time and/or surrender value (typically £1,500) to be of value.

Endowment policies are sold on the TEP (or SHEP) markets (the traded or second-hand endowment policy markets). If you are thinking about selling, you should ensure the TEP market makers you choose are APMM members, since this guarantees they are FSA regulated (APMM have a helpline for queries about this). Alternatively, there are endowment market brokers who can look for the best deals on your behalf.

An important consideration to make before selling
Of course, as well as an investment, you must remember that an endowment policy is ultimately a life assurance product. Therefore, bear in mind that selling endowment policies also results in losing out on a lump sum in the event of your death.

To sum up, endowment policies are a valuable insurance product, generally providing low-risk, long-term investment. However, underperforming stock markets and low inflation rates, often combined with changed family circumstances, are tempting many policy holders to consider surrendering their endowment. Selling endowment policies is another option for those who want to get a better price for their policy.

During the eighties and nineties, taking out endowment policies was a popular form of investment. Since then, disappointing returns from insurance funds coupled with lifestyle changes (redundancy, divorce, mortgage changes, etc.) have led many people to consider whether to surrender (cash in) their endowment policies back to their insurance company. The option of selling endowment policies has also caused many worried policy holders to prick up their ears and consider their options.

The problem with endowments
If you are an existing endowment policy holder who took their policy out in the nineties, you may remember the projections of 7.5 % mid-range growth over the term of the endowment (more in the eighties). If, like many others, you took out your endowment chiefly to pay off the sum remaining on an interest-only mortgage, the future looked rosy.

Unfortunately, the stock market has not behaved as projected, and endowment holders have had to endure year upon year of reduced bonuses, becoming anxious that they will experience a shortfall. Some policy holders, especially those who have experienced redundancy or other changes in circumstances, have considered surrendering or selling endowment policies.

There are a huge number of reasons why you might choose to sell your endowment policy rather than wait for it to mature. A major change of circumstances might mean you want to cash in on the money you’ve already saved, for example if you are starting a family, moving house or going through a divorce. Or you might simply need a source of capital to put into a new investment or business.

Selling endowment policies doesn’t have to be the hassle or worry it seems. Selling your endowment policy through a reputable policy purchaser can make the process easy and give you the cash injection you need for your future plans.

Many endowment policies were bought during the 1980s and 1990s, especially by home owners to fund the final sum due under an interest only mortgage. Endowment policies seemed the ideal combination of a structured long-term savings plan and life insurance to protect the family if the worst happened. But it is well known that some endowment policies failed to perform, and ended up leaving investors’ money stagnating – so it is the right option for many endowment policy holders to think about selling instead of waiting for the endowment term to end. Selling your endowment policy can be a good way of moving your money out of one of these policies and putting it somewhere it can work the best for your needs.

That said, there are any number of reasons why you might be looking to sell your endowment policy. Selling endowment policies can release funds for major life decisions such as buying a new property, repaying or refinancing your mortgage, investing in a new business or switching to a new savings plan. Many people sell their endowment policy when starting a new family in order to pay for necessary goods and products, move into a larger home or gain some extra income if one partner stops working for a time. Choosing to sell your endowment policy can also be the best option if you are having trouble keeping up with the repayments, if you have been made redundant or are in the process of a divorce, if you need to raise capital to clear other debts, or just if you are unhappy with the way the policy is performing. Indeed it might even be that you have obtained sufficient funds from another source to repay your mortgage, and therefore can sell the endowment policy because you don’t have any more need for it.

Whatever your reason, there are a number of options for selling your endowment policy should you choose to do so. They include surrendering your policy back to the endowment policy provider or life insurance company, or contacting one of the major endowment policy purchasers, either directly or through a specialist endowment policy agency.