Endowment plans are a type of insurance policy designed to help people save money over the long term. They are commonly referred to as “savings plans,” but they are not the same as a bank savings account. If you stop depositing money (paying premiums) during the policy term or withdraw your account in full before the stipulated number of years has passed, you will lose a portion of the funds you have put in. When you surrender your policy, you will only get back the “surrender value,” which is a portion of the premiums you’ve paid to date. Surrendering your policy early will cause you to lose money, so it’s best to avoid it if possible.
However, there is an alternative to surrendering your policy: selling it to a third-party investor. A third-party investor can offer a higher payout for your immature endowment plan that is more than the surrender value offered by your insurer. This way, you can recoup a greater portion of your loss. You can search online for “resale endowment policy” to find vendors who offer no-obligation, no-cost quotations to help you decide who to sell your policy to.
It’s important to note that holding your endowment policy to maturity doesn’t guarantee that you’ll make a profit or even break even. Your endowment plan returns comprise a “guaranteed” and a “non-guaranteed” payout. The “guaranteed” payout is usually lower than the sum total of your paid-up premiums, whereas the “non-guaranteed” payout is meant to make up for the remainder, plus profits. Because a portion of your returns is not guaranteed, you may end up getting back less money than what you paid in total.
When you sell your endowment plan, your policy is transferred to the party you sold it to. This means that while you no longer have to continue paying the policy premiums, you will also lose any coverage or benefits that were included in your endowment plan. For this reason, you should make sure you have adequate protection before selling your endowment plan.
It’s always best to maintain your endowment plan if possible. Contact your financial adviser to discuss your options, such as withdrawing a portion of your policy’s accumulated value to pay for your premiums. However, if you can no longer continue paying your premiums, selling your policy to a third-party investor can help you recoup a greater portion of your loss than surrendering it to your insurer.
Disclaimer
Every effort has been made to ensure the accuracy of the information provided, but no liability will be accepted for any loss or inconvenience caused by errors or omissions. The information and opinions presented are offered in good faith and based on sources considered reliable; however, no guarantees are made regarding their accuracy, completeness, or correctness. The author and publisher bear no responsibility for any losses or expenses arising from investment decisions made by the reader.
