Selling Endowment Policy – Is It An Option?

2007-03-08 10:33:40

( Insurance )



An endowment policy is like a term life policy in that the period during which payment for death of the insured is limited. Unlike a term life policy, in an endowment you receive the face value at the end of the period if you are still alive at the time. This fixed endowment term makes your premiums higher in endowment policies than in either term life insurance policies or whole life insurance policies.

But your profitability is fairly predictable in an endowment: this makes it attractive to other investors. Because of the recent rise in interest rates to above 5 percent and the recovery in the stock markets, projected returns on endowment policies have markedly improved compared to a few years back. For this reason, selling endowment policy is now an attractive option.

If you cannot wait any longer till your endowment matures, you may consider taking the selling endowment policy option. People selling endowment policy can now take their policy to the secondary market for traded endowment policies.

Not too long ago, selling endowment policy could give you only about 10 percent on the face value of your endowment. Today, the selling values are higher at about 30 percent – although more people are in the market for selling endowment policy. Values are going up because there is more demand from investors active in the traded endowment policies market.

You should remember, though, that endowments by nature are built to reward the long-term investor, usually over ten to twenty-five years. If you cash out early, you face the full costs of the policy, and in the early years, the payout would be much less. If your policy is well on its way towards maturity, you might consider holding on. After all, there must be a reason why those investors are so interested to buy if you are selling endowment policy.


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