endowment policy selling

Endowment Policy Selling


Caution the best policy with endowment selling

business.scotsman.com
WILLIE EWEN

ANYONE holding a with-profit endowment - a policy which guarantees to pay at least the value of your loan on maturity - cannot fail to have wondered whether they would be better off selling or surrendering their endowment policy selling to endowment traderspolicy because of the endless stream of bad news about endowments.

But you should never do this before considering alternatives such as leaving the endowment policy paid up - namely ceasing contributions - but otherwise maintaining ownership of the endowment policy. Other options include selling the policy on the traded endowment policy (TEP) market or surrendering the policy to the insurer. Another factor to consider is whether there will be a terminal bonus which could suddenly increase your endowment policy's value at maturity.

According to a with-profit endowments survey conducted by Money Management magazine earlier this year, of 28 policies examined there was only one (from Scottish Mutual) where investors would have been better off surrendering one year before maturity. In April 2004, by contrast, there were four companies showing a better surrender value at 24 years.

Despite this bad news surrounding endowments, the good news is that the survey also found that with-profits funds continue to significantly outperform balanced managed funds, UK index trackers, UK all-companies funds and building society accounts over the long term, while also offering the lowest volatility (although you should remember that past performance is not an indication of future returns). selling my endowment policy

But policies taken out within the last five to ten years have suffered notably from falling bonuses because with-profit companies are suspected of having "over-bonused" policies in the early 1990s and not reserved enough for the tough investment environment in recent years.

On the terminal bonus front, there is bad news as these bonuses are fast disappearing on policies of shorter terms. For instance, for 20-year policies, only three providers do not pay terminal bonuses, but this rises to seven for 15-year policies and 12 for ten-year policies. These "loyalty" bonuses are dependent on the investment conditions prevailing at the time of maturity, as well as upon the investment performance of the life company, and the final value is therefore not guaranteed. If you do decide to try to sell your endowment on the open market, be aware that not all policies will be accepted by market makers. Policies for re-sale should have at least five years to run to maturity and have a minimum surrender value of £2000 (a few require a minimum of £8000).

The price you are offered by the market maker will depend on the strength of the provider (the most popular policies are generally those from Prudential, Norwich Union, General Accident and Standard Life). The market maker will also deduct his costs before making you an offer.

According to the Association of Policy Market Makers as many as 40 per cent of all endowments do not last the full term - being sold or surrendered along the way.

A further 30 per cent are cancelled in the first few years of their intended lifespan. The best approach if you are unsure how to progress is to seek independent financial advice and carefully review all your options.
 

Endowment Policy Selling - List of most popular bought

Britannia Life britannia life endowment

Britannic Assurance  britannic assurance endowment

Canada Life canada life endowment

Century Life century life endowment

Clerical Medical clerical medical endowment

Co-Operative (CIS) Co-Operative endowment

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Irish Life Irish life endowment

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Life Association of Scotland

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Provident Life

Provident Mutual

Provincial Life

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Royal London Selling Royal London Endowment Policy

Scottish Amicable Selling Scottish Amicable Endowment Policy

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Scottish Friendly Selling Scottish Friendly Endowment Policy

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Scottish Mutual

Scottish Provident Selling Scottish Provident Endowment Policy

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Standard Life standard life endowment

Sun Life Sell Sun Life Endowment Policy

Sun Life of Canada  sun life of canada endowment

Swiss Life  swiss life endowment

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UK Provident

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Wesleyan Assurance Endowment - I want to sell my Wesleyan Assurance Endowment

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