Selling/Cancelling endowment early

Methinks you mistyped "now".

Returns at the moment are not important. What you need to consider is returns over the next 12 years. Get yourself a nice crystal ball, or else a pair of truth dice.

Couldn't we all. But could you do more with more later than less now?

An option that's usually a good compromise is to make the policy paid-up. That means you stop paying the premiums, and just let the value sitting there already keep on growing, instead of selling it at a loss.

It could be under certain circumstances. Not terribly likely though.

We took out a 25 year endowment with Eagle Star back in 1992. In 2001 after seeing how much more cash they thought we should pour in to prop up an 'investment it was clear was not going to repay our mortgage in 2017, we decided to make the policy paid up and make alternative arrangements to repay the mortgage.

Last month we received our yearly statement for the paid up policy and saw the dire bonus paid for 2003. As offered in the accompanying paperwork we asked for a forecast of what the policy was likely to pay out when it matured. When this arrived, it showed totals for a 2% growth and 4.5% growth - and along with it came a warning that Eagle Star were likely to be cutting their bonus rates further, so the likelihood of them matching that upper figure seems very remote.

After reading a thread on here about endowment's and whether they paid a terminal bonus on paid up policies, I telephoned the company again and asked this very question - the answer was NO, they don't. Since a large part of many endowment gains comes from the terminal bonus, this made our decision very easy. We can get 5.2% on the current worth of the policy - which I don;t think Eagle Star will come anywhere near matching - by putting the cash from the policy straight into our current account mortgage, and if interest rates rise, which I think is more than a little likely, that 5.2% will rise further with them. So for us it was no contest, we cashed in the policy and paid the proceeds into our current account mortgage......interesting point is that at no time did Eagle Star mention that terminal bonuses were not paid on paid up policy until we asked them the question outright.

If you do decide to sell or cash it in - make sure you don't need the element of life assurance though or that if you do it is replaced.

Lyn

I can see exactly what you're saying. Whats the best place to sell ?

Because we made ours a fully paid up policy it wasn't possible to sell it on, but a google search should bring up a list of companies who trade endowments I should think....good luck!

Lyn

This sort of question is often asked. However, the OP never mentions which fund they are invested in. Frequently, no doubt, the policy is a with-profits one, but is yours? And which company? If it's with-profits the chances of different companies paying bonuses in the future will vary enormously. Most people automatically blame the insurance company for poor returns, and while this may often be true, because the policyholder usually has no idea of where his money is I put some of the blame on them for not keeping an eye on their money. If you had a mass of stocks and shares and their value went down, would they investor blame the companies, or would he take it on the chin and say that he should have seen it coming and put his money in cash? Most endowments have alternative funds that can be used, although this is easier said than done because unless you're Warren Buffet you won't know what to do and when to do it.

People who have had experience with their own policies, either maintaining them or selling them, are not the best people to take advice from unless their policies match yours. It's horses for courses. And over-riding all this is what's going to happen in the future, not what's happened in the past.

If you want to sell yours, then it needs to be a with-profits policy, not unit-linked. However, if you need the cash you need the cash, and maybe selling is the best option. If it's unit-linked you'll have to sell it back the provider, i.e. encash it.

Rob Graham

If someone has a with-profits, life assurance, endowment policy and they sell it on. Does the new owner of the policy now have an interest in the life assured of the previous owner?

Buster

Yep, makes me slightly worried that someone I don't know gets a payout if I peg it after selling mine a while back.

Thanks, That is what I thought. It worries me too. I'll bet some new owners make surreptitious enquiries, from time to time, about the "state of health" of the lives insured".

Buster

I have a feeling that the life cover is terminated when the policy is sold.

In message , Buster writes

yes

In message , Terry Harper writes

Not if the premiums are maintained. The death benefits are assigned to the new owner. On sale, most TEP traders ask for a 'refereree' upon whom enquiry can be made form time to time to check on the continued existence of the lives assured.

Its a with-profits with Clerical Medical.

Is that what really happens when sometimes buys an endowment you've sold ???

Where do you buy these from?

If with-profits endowment policies are such bad news - then who exactly is buying second hand ones anyway? Hardly a good investment are they? If so, we may as well keep them.

I've just got quotes from various TEPs regarding my Norwich Union policy. The quotes vary by up to 600 so SHOP AROUND!

I'm still in two minds whether to sell or not. It's a 17 year old policy with 8 years to run and which managed a paltry 18 in bonuses last year - and is worth approx 5,600 if I cash it in. I only pay 21.50 per month and that's to insure 2 lives.

Anyone care to comment on whether they would keep it going or not? I don't need the cash at present. (Or the lives cover).

dan

What matters is the difference between that surrender value, the re-sale value and the value on maturity. The latter is made up of the basic sum assured, the reversionary bonuses declared to date, and your guess as to any future bonuses. If your future premiums (presumably £21.50 for 96 months £2064) is substantially less than the difference between maturity value and surrender value/sale value, then it could be worth keeping it going.

If it is a "with profit " policy provide detials on our website

They took contact details for my sis as well as wanting her to let them know if I pop my clogs. On the plus side she gets a few quid off them in that case.

No, I've done it, it's not terminated.

My experience exactly.