We look at why so many people are cashing in their endowments early.
The majority of endowment policyholders do not maintain their endowment policy to the end of the policy term. There are many reasons why the original policyholder may want to surrender their with-profits endowment policy before the maturity date.
Some of the more common reasons include:
- change of mortgage
- unhappy with the policy/projections
- divorce
- need capital
In the majority of cases a better surrender value can be obtained on the traded endowment market, compared to that offered by a life assurance company. The difference is typically 15% but can be as high as 40%. Visit TEPs Explained for further details.
Click here to get an instant valuation of your endowment policy.
Selling endowment policies to the second hand market is a rapidly growing area of personal finance, with 100,000 people each year deciding to cash in their policy. In fact, £1,600,000,000 worth of policies have been sold to-date.
An independent BMRB survey of the UK's attitudes to endowments was commissioned recently by 'Surrenda-link', in order to gauge public opinion.
Here is a summary of the results:
- 40% of people say they have/have had an endowment policy.
- 84% of people would not choose an endowment policy as a means of mortgage repayment. - 66% of people believe Endowment's have lost their credibility.
- 39% of people who have endowment policies are concerned they will not meet the requirements of their mortgage.
- Only 15% of people are aware they can sell an endowment policy.
It is essential that independent financial advice be taken before deciding to sell a second hand endowment policy.
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