Sell My Endowment Policy
Do I have to surrender my endowment policy back to the issuing life office – To quote the Financial Services Authority, “If for whatever reason you’re thinking of surrendering or cashing your policy in, make sure your endowment company tells you about ALL the options – that includes the option of trading the policy in as well as surrendering it if it has been running for at least five years”.
If I decide to go ahead with selling endowments, how much will I get – Firstly it has to be a with profits endowment policy, and secondly, It depends on how long it has been running. The longer the better. As a guide, the endowment market maker (policy buyer) will only buy endowment policies that have been running for at least 5 years and have a surrender value of at least £1,500
If I sell my endowment policy, will I lose the life assurance attached to it – Yes. The new buyer will collect on the life assurance if you die before the maturity date of the policy. You should consider replacing the life assurance by clicking here . You may only need a term assurance, which is about the lowest cost life assurance that you can get, but the life provider can advise on this.
After selling endowments, who pays the monthly premiums – The new owner/buyer.
If I sell my endowment policy will I have to tell my mortgage lender – Yes you should tell the lender, and you should then consider setting up an alternative repayment method. If in doubt take advice from an independent financial adviser.
Is this the only web site where I can sell my endowment – No. However by using this site you will be making contact with the leading uk market maker who arrange these transactions daily and speedily.
I still cant decide whether selling endowments is a good idea or if I or keep them – Take advice from an independent financial adviser.
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read moreBuying Insurance Bonds: Endowments And Broker Funds
These are usually associated with mortgages. They have recently come under criticism because returns are lower than were expected a few years ago and some holders are being notified that their policy is now unlikely to produce enough money to pay off the mortgage when it becomes due.
However, they are a suitable vehicle for lump sum investing and take the form of a one off lump sum investment in a ten year policy. There are with profits and unit linked varieties, the only difference being a terminal bonus in the case of with profits, which should be substantial.
Second hand endowments
There is a market in second hand endowment policies and these can be a good investment. You buy the policy for a lump sum and unless it is paid up you need to be able to continue paying the premiums till maturity.
As the life assurance element continues on the life of the original investor, you can get an earlier pay out if that person dies but you need to keep in touch in order to find out if it happens.
To spread the risk, you can invest in second hand endowments via a specialist investment trust.
Maximum investment plans
This is a fancy name for what is actually an endowment policy do not be deceived into thinking it is something else. There are also maximum savings plans identical except they are intended for regular monthly contributions instead of a lump sum.
Broker funds
Independent financial advisers and stockbrokers offer broker funds to their clients. These are investments in the funds of a life assurance company where the broker makes the allocation over the individual funds for you.
Originally investments were ‘fettered’ to the funds of the chosen life company, which meant they were akin to ‘fund of funds’ investments, except that there the life company makes the allocations.
However, many are now ‘unfettered’, i.e. they permit investment in other life companies’ funds, unit trusts and even individual shares.
The advantage claimed for broker funds is that the IFA/broker has extra expertise in the allocation decision, enough to more than compensate for the higher costs (but costs are not necessarily doubled because there will be some discounting of costs between the two parties).
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Related posts
read moreBuying Insurance Bonds: Endowments And Broker Funds
Endowments
These are usually associated with mortgages. They have recently come under criticism because returns are lower than were expected a few years ago and some holders are being notified that their policy is now unlikely to produce enough money to pay off the mortgage when it becomes due.
However, they are a suitable vehicle for lump sum investing and take the form of a one off lump sum investment in a ten year policy. There are with profits and unit linked varieties, the only difference being a terminal bonus in the case of with profits, which should be substantial.
Second hand endowments
There is a market in second hand endowment policies and these can be a good investment. You buy the policy for a lump sum and unless it is paid up you need to be able to continue paying the premiums till maturity.
As the life assurance element continues on the life of the original investor, you can get an earlier pay out if that person dies but you need to keep in touch in order to find out if it happens.
To spread the risk, you can invest in second hand endowments via a specialist investment trust.
Maximum investment plans
This is a fancy name for what is actually an endowment policy do not be deceived into thinking it is something else. There are also maximum savings plans identical except they are intended for regular monthly contributions instead of a lump sum.
Broker funds
Independent financial advisers and stockbrokers offer broker funds to their clients. These are investments in the funds of a life assurance company where the broker makes the allocation over the individual funds for you.
Originally investments were ‘fettered’ to the funds of the chosen life company, which meant they were akin to ‘fund of funds’ investments, except that there the life company makes the allocations.
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Related posts
read moreEndowmments Selling
Many homeowners in the UK during the 80′s and 90′s purchased endowment policies. They were sometimes called mortgage endowment policies. These policies were a form of insurance and investment savings that would cover the final cost of the home mortgage when it came due. The policy holder would make monthly payments and these payments were to cover their mortgage and provide for some savings.
Despite intentions or promises, investments can vary in end value, and these policies did not come with a guarantee that they would pay out enough to repay the mortgage at the end of the policy term. What’s occurring now is the endowments have a shortfall and cannot pay the owners mortgage payments. In some cases, endowment holders are reporting shortfalls of tens of thousands of pounds.
That has resulted in a lot of stress and disappointment for the policy holders. Many in a state of frustration are surrendering them to the issuing life companies for much less than their value. Life companies include Norwich Union, London Life, Scottish Widows, Prudential Life and many others.
Selling on the Secondary Market
Finance companies have appeared who help find buyers for these policies. Endowment policies can be traded, bought or sold on the open market. A few of the endowment policy trading firms have access to extensive numbers of potential buyers who are looking for the right type of policies to purchase. That means sellers can access buyers who are more interested in their particular policy and that results in a higher price.
Left to their own devices, endowment policy holders don’t have access to the right services. Without a strong base of potential buyers, they’re not likely going to receive the full value of their policy.
What is a Traded Endowment Policy?
Traded endowment policies or TEPs are policies which the original policyholder has sold and that includes the assignment of all future benefits. Endowment policies are long-term and fairly rigid in design. Many policy holders realized that the endowment policies do not meet their changing financial circumstances and goals. They can borrow against the value of the policy as it is considered a viable asset by banks and finance companies. They can also unload the endowment policy by selling them.
Only about a third of all endowment policies reach full term, (e.g., 25 years). Many are or were cancelled within a few years of their conception. That leaves about a third that may reach full term.
Traded Endowment Claims
Endowment policies were sold as a savings instrument that would help to cover long term home mortgages. Many didn’t and won’t and that has resulted in a lot of legal or mis-selling claims and the assurance companies who issued them. Financial services firms are offering to help with the process of policy holders selling their policies. To avoid scams and ripoffs in the UK, you should not sell your policy via any firm that does not adhere to the dictates of the Financial Services Authority’s Mortgage Endowment Department.
There are numerous companies brokering or selling endowments and policyholders are recommended to ensure these companies are governed by the FSA in the UK.
In the UK, the government’s Financial Services Authority has set out guidelines for managing endowment policy complaints and claims. The FSA’s contact address is as follows: Mortgage Endowment Department, The Financial Services Authority, 25 The North Colonnade, Canary Wharf, London E14 5HS.
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