You could get a cash lump sum now by selling your endowment policy. Here is how selling to a third party could make you more money than selling it back to your provider.
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.
If you have an existing endowment policy, you have three options:
Waiting until maturity: This means you have to keep paying into it every month. You will not receive any money until its maturity date, which is when the policy pays out a lump sum at the end of its term.
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 get at maturity.
Selling your endowment: You can do this using the Traded Endowment Policies (TEP) market to sell your endowment to someone else.
You do not have to sell your endowment back to the policy's provider.
You can usually get a better price if you sell it to someone other than your endowment provider: usually 5% to 7% more than if you surrender it.
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 to 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 do not provide advice when you sell to them. If you want guidance on if you should sell and what you should do with your lump sum, contact a financial adviser.
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.
When it matures
How much it is worth
What type of endowment policy you have
This information should be included in your policy's annual statement. If you cannot find it or anything is missing, ask your provider.
Endowments usually mature after between 10 and 25 years. If you took it out with a mortgage, it should finish at the same time as your mortgage.
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, so ask your provider to confirm the current surrender value.
You have to 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.
The companies that buy endowments have rules about the types of policy 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
You can sell your endowment on the TEP market using a traded endowment specialist. This is a company that buys endowments to sell on to another investor.
You can use our comparison to find the best deal when you sell your endowment.
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, e.g. seven days.
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 that gives you the most money for your endowment.
You can then decide if you should sell your endowment to the endowment specialist.
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.
Three weeks, on average. But how long it takes depends on the company that buys it.
Brokers act as a middleman to sell your policy directly to an investor. This takes longer because you have to wait until they find someone who wants to buy it.
Other companies pay you for your policy immediately. These companies hold a range of different policies that they can sell to investors later.