So here we are….like so many others, our endowment will fail to meet the unrealistic projections that we were given at their inception. Perhaps, our circumstances have changed over the years, and we are at a point where we need to raise liquid funds due to either a ‘cash crunch’ or for an upcoming project. Maybe we want to use the funds to pay off some of the outstanding capital on our mortgage. Either way, we have decided that we want to liquidate our endowment policy….the question is: Do I surrender or sell?

What Are The Options On Your With Profits Policy ?

Let us look at all the options that you have:

I) You could surrender your policy direct to the issuing life office.

II) If you were just experiencing a short term cash shortfall, you could borrow against your with profits policy. Your issuing office life office might be able to lend against this for you, or alternatively, using your policy as security, a Bank would probably be happy to lend to you.

III) If you are just looking to alleviate the financial strain of your monthly endowment payments, you might choose to make the policy ‘paid up’. If you decide to do this, you are not obliged to make any further payments on the policy. The downside to this is that you will receive reduced payments on either your death or when the policy matures.

IV)  You could either auction the policy or sell it on the second hand market. 

Take Careful Note Having decided to either surrender or sell your with profits endowment policy, there is one very important point to note. Should you decide to go ahead, you will loose the benefit of the life insurance protection that was an integral part of your policy.

Another point worth bearing in mind is that if your policy is with a mutual life office, and the company demutualises in the future, you will not be eligible for any windfall payments issued.

Who To Contact Should you decide to surrender your with profits policy, then you should approach the issuing life office direct. I you, decide, however, that you wish to sell your policy on the open market, you will need to contact one of the many companies that now specialise in undertaking this service for the general public. A good company will contact all of the market makers dealing in these with profits policies, in order to get the very best price for you.

There should be no fee for your initial enquiry, nor should there be a fee once a sale has been secured for you – the broker will be paid by the endowment purchaser. 

What Is The Procedure If I Sell ?

I)   Firstly, having decided upon a suitable seller for your with profits endowment, you must submit an online enquiry form.

II) On receipt of the form, the company will make enquires with all of the market makers that buy with profit endowment policies, attempting to get the best price for you.

NOTE: If any of the market makers have seen your details before…..perhaps because you went through another broker or tried direct, they will mostly refuse to deal, as second and subsequent enquiries are often rejected out of hand.

III)          Having found a buyer for your endowment, should you agree to the sale, you should receive the funds three to four weeks later.

How Am I Protected During The Sales Process ?

The brokers you are dealing with should all be authorised and regulated by the FSA to carry out business related to the dealing and sale of with profit endowment policies. It is up to you to check this !

Although you will be asked for the policy documents by the purchaser or their solicitors before completion of the sale, the policy is still legally your property until you have been paid. Once the policy is sold, all rights, responsibilities and liabilities, fall to the new owner.

So Should I Surrender Or Sell ? How Much Will I Get ?

Sadly, I am only able to offer specific financial advise to my clients and only whilst at the ‘day job’….sorry FSA reg’s!  Besides, the site moderators would soon ban me from submitting here….BUT…….

What I can say is that in my personal experience, you can probably expect to get, ON AVERAGE , between five to twenty percent more if you sell your with profits endowment, than if you surrender it.

In my experience, I can also say that whilst some firms advertise returns of thirty to fifty percent, this is generally the exception rather than the rule !!!!Â