Selling Endowments
If you have an endowment that you are looking to sell, then this guide to selling endowments will answer some questions that you might have. We will talk about what endowments are, how they work, and how you can sell yours if needed and get the most value for your situation.
What is an Endowment Policy?
If you are not familiar with how endowments work, in basic terms, an endowment policy is an investment product or life insurance contract that is designed to pay out a lump sum of money at a specific date in the future or when the endowment 'matures'. Traditional maturity times are 10, 15, or 20 years up to a certain age limit. Some products carry life coverage and will pay out early due to serious illness or death. A full endowment is a with-profits endowment where the basic sum assured is equal to the death benefit at the beginning of the policy and, figuring in growth the final payment would be much more than the sum assured.
Other types of endowments can be setup as savings plans to fund events in the future or as mortgage endowments to provide an alternative plan to paying off mortgages as they reach their maturity date. This type of endowment can be a risky proposition as investments in general have not done well as of late, so proceed with caution if you ever consider this as an option.
Generally you make a monthly payment to your endowment similar to other investment plans. All of the money from other similar endowments is pooled together and invested with the intention of of making it grow. Generally once your payments are setup you cannot change the amount that you contribute and you are set until the maturity date.
Determining the Value of an Endowment
If you are thinking about endowment selling the easiest way to find out the current value of yours is to contact the company where your policy is held. They should be able to tell you what the current value is and assist you with any other questions you might have.
Selling an Endowment Policy
You should be working with a financial advisor or planner and this stage and if they have recommended that it would be wise to sell your endowment policy then you should proceed. Basically you can either trade-in or surrender your policy and there is a reason for both. If you decide to trade in your endowment, you are selling it to a third party and they essentially take over the payments but the assurance remains on you. When it matures the new owner receives the money.
By surrendering your endowment, the company you are dealing with pays you a surrender value. Which one is better? It depends on your specific situation and how much time is left on your endowment until maturity. You need to make sure you understand your policy and all of the options that are available when selling endowments.
If you have an endowment that looks like it has not made very much money you should definitely talk to the endowment company to examine every possibility for compensation. You may may be due money if even if it seems you have not gained financially.
As mentioned before it is very important to understand your endowment policy. Sound advice can be the difference between making a huge financial mistake and doing the right thing. Work with a financial planner or professional that understand endowments and how to help you with the selling process if that is the road you decide to take.
Where to Sell Endowments
There is a special market of companies that buy endowments, often called policy traders or market makers. These firms will buy endowments and give you trade-in value as mentioned previously. Make sure you are dealing with a reputable company by selling endowments to policy traders that are only members of the Association of Policy Market Makers.
We wish you good fortune when going to sell your endowment policy. Use common sense and employ the help of professionals when necessary to get the most out of your sale.