If you are thinking about surrendering your Provident Life endowment policy, it is worth finding out if you could sell it instead, because you could get more.
The surrender value that insurance companies offer for endowments, like Provident Life endowments, is often pretty low, but because of their reputation, many people feel surrendering is the only option. But, endowment policies can be attractive propositions for investment companies who will hold a portfolio of With Profits Endowments, because they provide a partially-assured rate of growth within a relatively low risk investment strategy, so it is worth finding out if you can sell your Provident Life endowment.
Thursday, February 25, 2010
Pearl Endowment
Before you surrender your Pearl endowment policy, it is worth getting a sales quote that could get you more for it. When you surrender your policy back to the policy provider, the price you receive will often not reflect the true value of the policy and you will be charged a fee for surrendering before the term of your policy is up. It is free to get a quote from our professional service, provided by specialist endowment broker.
Nationwide Endowment
You could find that you get a lot more for your Nationwide endowment policy by selling it rather than cashing it in with your insurance company. Surrender values tend to be quite poor, and although not all endowments are suitable for resale – usually only traditional with profits policies that are at least five years old – you could get significantly more for selling your Nationwide endowment.
Ecclesiastical Endowment
Surrendering your Ecclesiastical endowment is an easy option, but it is not necessarily the best idea, because, surrender values tend to be pretty poor and you could end up with a shortfall. You should be aware that not all endowments are suitable for selling on the second hand market and generally only those traditional with profit policies that are at least five years old will be saleable. If you sell your Ecclesiastical endowment policy, you could find that you get more than you would if you have surrendered it. If you do sell though, you will no longer be covered by the life insurance it provided, so you may want to look at alternatives
Auction an Endowment
An auction or sale of an endowment policy can bring in a significantly higher amount than surrendering a policy back to the insurance company. Auctions of endowments are usually arranged through a specialist auctioneer, where private individuals or companies bid for your policy.
There is an active buying market for second hand or traded endowment policies which has recently been fuelled by a demand from institutional investors abroad.
There is an active buying market for second hand or traded endowment policies which has recently been fuelled by a demand from institutional investors abroad.
Endowment Policy types
Traditional with Profits Endowments
hese policies are the back-bone of the traded endowment policy market. The popularity of these policies is that the amount payable on maturity (or death) is the guaranteed sum assured, plus any accrued bonuses. Due to the variable nature of future bonuses, it is not possible to guarantee what the eventual pay outs might be, so projections are based on past experiences. Premiums are higher than for non-profit endowments with a similar sum assured.
Low-cost with Profits Endowments
This is a low cost version of the with-profit endowment. These policy types utilise a combination of with-profit endowment and decreasing life assurance. They were introduced as a cheaper way of covering house purchase loans, with the guaranteed death sum assured being equal to the loan. As the basic sum assured is less than it would be under a full with-profit endowment, the premiums are cheaper and due to the life assurance element, there is a guarantee that the loan will be repaid on death.
Low-start with Profits Endowments
The low-start endowment is a variation of the low-cost endowment. Premiums start at a low level and rise gradually over a number of years to the full premium. The initial premium is very low, but this is balanced by a full premium that is somewhat higher than an ordinary low-cost endowment. This type of policy is aimed at the house buyer who is working on a very tight budget and expects salary increases in the future. The sum assured and bonuses continue through the term of the policy in the normal low- cost basis and are not affected by the low initial premiums.
Unit Linked Endowments
These policies were designed specifically for use with mortgage repayment. The premiums are used to buy units in a managed fund at the prevailing market price. The number of units held increases over time as more and more premiums are paid. There is no guaranteed annual growth rate caused by the addition of annual reversionary bonuses. Instead, the value of the endowment depends on the underlying investment performance. Not all the premium goes towards investing in units. Some of the units are cashed in to buy life cover. As with other endowments, the life assurance element ensures that the full loan can be paid back if the policyholder dies.
With Profits Flexidowments
The Flexidowment is an endowment policy that has an open-ended term after an initial period. These policies can be cashed in without the normal surrender penalty, at any time after 10 years. The surrender value is usually guaranteed, or partly guaranteed, and is similar to an early maturity value than the traditional endowment surrender value.
hese policies are the back-bone of the traded endowment policy market. The popularity of these policies is that the amount payable on maturity (or death) is the guaranteed sum assured, plus any accrued bonuses. Due to the variable nature of future bonuses, it is not possible to guarantee what the eventual pay outs might be, so projections are based on past experiences. Premiums are higher than for non-profit endowments with a similar sum assured.
Low-cost with Profits Endowments
This is a low cost version of the with-profit endowment. These policy types utilise a combination of with-profit endowment and decreasing life assurance. They were introduced as a cheaper way of covering house purchase loans, with the guaranteed death sum assured being equal to the loan. As the basic sum assured is less than it would be under a full with-profit endowment, the premiums are cheaper and due to the life assurance element, there is a guarantee that the loan will be repaid on death.
Low-start with Profits Endowments
The low-start endowment is a variation of the low-cost endowment. Premiums start at a low level and rise gradually over a number of years to the full premium. The initial premium is very low, but this is balanced by a full premium that is somewhat higher than an ordinary low-cost endowment. This type of policy is aimed at the house buyer who is working on a very tight budget and expects salary increases in the future. The sum assured and bonuses continue through the term of the policy in the normal low- cost basis and are not affected by the low initial premiums.
Unit Linked Endowments
These policies were designed specifically for use with mortgage repayment. The premiums are used to buy units in a managed fund at the prevailing market price. The number of units held increases over time as more and more premiums are paid. There is no guaranteed annual growth rate caused by the addition of annual reversionary bonuses. Instead, the value of the endowment depends on the underlying investment performance. Not all the premium goes towards investing in units. Some of the units are cashed in to buy life cover. As with other endowments, the life assurance element ensures that the full loan can be paid back if the policyholder dies.
With Profits Flexidowments
The Flexidowment is an endowment policy that has an open-ended term after an initial period. These policies can be cashed in without the normal surrender penalty, at any time after 10 years. The surrender value is usually guaranteed, or partly guaranteed, and is similar to an early maturity value than the traditional endowment surrender value.
Traded endowments
Traded endowment policies (TEPs) or second hand endowment policies (SHEPs) are traditional with-profits endowments that have been sold to a new owner part way through their term. The TEP market enables buyers (investors) to buy unwanted endowment policies for more than the surrender value offered by the insurance company. Investors will pay more than the surrender value because the policy has greater value if it is kept in force than if it is terminated early.
When a policy is sold, all beneficial rights on the policy are transferred to the new owner. The new owner takes on responsibility for future premium payments and collects the maturity value when the policy matures or the death benefit when the original life assured dies. Policyholders who sell their policies, no longer benefit from the life cover and should consider whether to take out alternative cover.
The TEP market deals exclusively with Traditional With Profits policies. The easiest way of determining whether an endowment policy is in this category is to check to see whether your policy document mentions units, indicating it is a Unitised With Profits or Unit Linked policy, if bonuses are in sterling and there is no mention of units then it is probably a traditional With Profits. The other types of policies - “Unit Linked” and “Unitised With Profits” have a performance factor which is dependent directly on current investment market conditions. These are not tradable as the guarantees on the policy are much lower and there is no gap between the surrender value and the market value
When a policy is sold, all beneficial rights on the policy are transferred to the new owner. The new owner takes on responsibility for future premium payments and collects the maturity value when the policy matures or the death benefit when the original life assured dies. Policyholders who sell their policies, no longer benefit from the life cover and should consider whether to take out alternative cover.
The TEP market deals exclusively with Traditional With Profits policies. The easiest way of determining whether an endowment policy is in this category is to check to see whether your policy document mentions units, indicating it is a Unitised With Profits or Unit Linked policy, if bonuses are in sterling and there is no mention of units then it is probably a traditional With Profits. The other types of policies - “Unit Linked” and “Unitised With Profits” have a performance factor which is dependent directly on current investment market conditions. These are not tradable as the guarantees on the policy are much lower and there is no gap between the surrender value and the market value
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