Selling an endowment policy

Endowment policies can fetch thousands on the open market
Selling endowment policies is big business. BBC News explains how you can go about selling an endowment and what are the pitfalls?

When it comes to making a decision on stopping an endowment and surrendering it, it is important to check your policy and make sure there is some value in doing this.

Early redemption can result in making less than you would have if it carried on for its full term, but if you need to have the money, then this may be your only solution.

Of course, continuing to pay money into a poorly performing investment could be throwing good money after bad.

As well as surrendering it back to the company who sold it, policyholders also have the option of selling it to a third party.

This can have the added benefit of getting more for your policy than you would if it was sold back to the original issuer.

Likely returns

Different companies have different requirements when it comes to them buying your endowment.

Usually they require it to be with-profits or a with-profits whole life policy and have been running for a minimum number of years.

Other policies are difficult to sell to investors as they do not give the same levels of return as a with-profits.

Some will also require the surrender value to be at least £1,500. If your policy does not meet the criteria, then they will not be able to handle your sale which means the only option available is what the policy issuer can offer.

The Association of Policy Market Makers (APMM) is the industry body for firms specialising in the buying and selling of endowments.

The APMM runs an investor helpline 0845 8330086 as well as and one for sellers 0845 011 9394, which offers quotes on your policy from eight different market makers.

Getting advice

An independent financial advisor could also be helpful in comparing offers and helping you get the most for your policy.

For doing the work they will charge a fee, but it could save you time and energy and also help you achieve the best possible price.

The main thing to remember with your endowment policy is that it is important.

You should not suddenly stop making payments or cancel the policy without doing research and taking the appropriate financial advice.

If you stop payments on a policy, you may lose any life assurance cover that it offered you - an important consideration for your dependents if you are then taken ill or die without having set up an alternative means of paying off the policy.

The opinions expressed are those of the author and are not held by the BBC unless specifically stated. The material is for general information only and does not constitute investment, tax, legal or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Always obtain independent, professional advice for your own particular situation.