How to sell your endowment

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You could get a cash lump sum now by offloading your endowment policy. Here’s how you could make more money by selling it to a third party than back to your provider.
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When you sell your endowment you will lose any associated life insurance and forgo any future windfall payments from the Life Office.

You may also get less than you would receive if you kept your policy until maturity.

An endowment is an investment that pays out upon maturity. It provides for your future, although some people feel the need to sell their policy early, even though you might get less than you would receive if you kept your policy until it matures.

What are your options?

If you have an existing endowment policy, you have three options, which are to  keep, surrender or sell your endowment policy:

  • Waiting until maturity: This means you have to keep paying into it every month or annually. You’ll not receive any money until its maturity date, which is when the policy pays out a lump sum. This is usually after ten to 25 years – or if you die before the end date.

  • Surrendering your endowment: You can cancel your policy before it matures. Your provider will give you a lump sum, but this is likely to be much less than the amount you would have got at maturity.

  • Selling your endowment: You can do this using the Traded Endowment Policies (TEP) market to sell your endowment to someone else.

How does selling an endowment work?

You don’t have to sell your endowment back to the policy's provider, which is fortunate as you may get a better price by selling it elsewhere.

The TEP market lets you sell your endowment policy to a person or company that is looking to buy one as an investment.

This is different from asking your provider to cancel it because the policy keeps running in its existing format until maturity. But the name on the policy is changed to the new owner, who pays you a cash lump sum and:

  • Takes over paying the premiums

  • Receives the policy's payout when it matures

Most endowment companies are execution-only, which means they don’t provide advice when you sell to them. If you want guidance on whether you should sell and what you should do with your lump sum, contact an independent financial advisor.

What to check before you sell

Find your endowment provider

Before you can sell it, you need to find out which insurance company provides your endowment. Check your:

  • Paperwork: If you still have the documents you were given when you took out your endowment, check which company you used.

  • Bank statement: You usually have to make a regular payment into an endowment. Your statement should show a direct debit to the company each month.

  • Mortgage company's records: Your original lender could give you details of the endowment you took out alongside your mortgage.

Find details of your endowment

Check:

This information should be included in your policy's annual statement. If you can’t find it or anything is missing, ask your provider.

As endowment policies usually mature after between 10 and 25 years they are considered a useful supplement to other retirement savings and investments. Although less common now, you may have taken out an endowment with your mortgage. If this is the case the two should finish at the same time 

Your statement should tell you how much the endowment is likely to pay out when it matures.

It may also give the surrender value, which is the amount your provider pays you if you cancel the policy.

But this amount is likely to have changed since your statement was sent, as it will depend on how the underlying investment performs, and this it never guaranteed. So ask your provider to confirm the current surrender value.

You must give the surrender value and date when you sell your endowment to another company. Most companies only accept this if the date is within the last 30 days.

Check you can sell it

The companies that buy endowments have rules about the types of policies they accept. For example, they might only buy with profit policies with:

  • At least a year left before maturity

  • No more than 20 years until the maturity date

  • A surrender value of at least £3,000

How to sell your policy

Find a buyer

You can sell your endowment on the TEP market using a traded endowment specialist. This is a company that buys endowments to sell to another investor.

Select the company that sold you your endowment and enter the details of your policy. You will then get quotes from traded endowment specialists.

These quotes let you know how much they can pay you for your policy. The offers expire after a set time, such as seven days.

Choose the best deal

Compare the amount offered by each company to the surrender value your original provider gave you.

Some TEP companies may increase their offer if you let them know another company offered you more.

Make sure the quotes are more than the surrender value and check which one gives you the most money for your endowment.

You can then decide if you should sell your endowment to the endowment specialist.

Complete the sale

Let the company know you have accepted their offer and send back any paperwork they request. They then contact your policy provider to transfer your endowment.

You will be paid by cheque or bank transfer once they have completed the paperwork and the policy is no longer in your name.

Your TEP buyer will let you know the date you can stop making monthly payments to your endowment policy.

How long does selling an endowment take?

It takes three weeks, on average to sell an endowment. However, this is just a rule of thumb. If you use a broker to sell your policy directly to an investor it could take longer because you’ve to wait until they find someone who wants to buy it. The upside to using a middleman is that you could end up getting a better price for your policy.

Other companies, including some brokers, pay you for your policy immediately. These firms hold a range of different policies that they can sell to investors later.