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Selling Endowments

Useful information on selling endowments from the pros and cons of cashing in your endowment policies to advice on mortgage shortfalls.

During the 1980s and 90s endowment policies were hugely popular, especially amongst home buyers who saw them as the best way to pay for a house when taken with an interest only mortgage.

Consisting of a combined savings plan and life insurance policy, endowments were projected to increase so significantly in value that on maturity they would not only provide sufficient funds to enable investors to pay off their mortgage completely but, in addition, would provide surplus funds that could be used for further investments or to provide funds for retirement.

Unfortunately due to warnings of poor performance, projected shortfalls and claims of misselling endowment policies have fallen out of favour. Because of this, many are choosing to cash in and sell their endowment policies to market makers (or policy purchasers) rather than waiting for them to mature.

There are a huge variety of reasons why people choose to sell their endowment policies other than simply losing faith in their performance. Many release the funds from their endowment policy to accommodate a change in their personal circumstances such as starting a family, as the cash released can help with the cost of purchasing baby products, moving to a larger home and supplement a reduced income if one partner stays at home to look after the children.

Regardless of the reason, when you decide to cash in your endowment policy there are several options available to you. These include surrendering your policy back to the life company, searching the market for policy purchasers yourself or using a specialist endowment company to do this for you.

Before you surrender your policy back to the life company, it is well worth checking whether you can redeem a better price from a policy purchaser. To do this you will need to obtain the current 'surrender value' for your endowment policy from your life assurance company so that you can compare it to any quote offered.

When looking to sell rather than surrender your policy you have 2 options. You can either contact policy purchasers individually or use a company such as who will search the market and negotiate the best price possible for your endowment policy.

When considering your options it is important to remember that demand on the endowment market changes daily and quotes are only held for a short amount of time. If you have decided to sell and are looking for quotes you will need to move quickly; for this reason it is usually much more convenient to sell through a specialist endowment company. Especially as many offer a re quote service whereby if you are not happy with the initial quote offered they will continue to search the market on a daily basis until a quote more in line with your expectations is found.

When considering selling your endowment policy it is important to research your options thoroughly and ensure that you are happy with the options presented to you. For instance, there is a possibility that selling your policy before maturity could mean that you make less than you would have if you'd have continued for the full term. However, if a change in circumstances means that you need the money, then selling your policy may be the right thing to do. One thing is for sure; if you decide to sell your policy you should try and redeem as much money as possible.

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