Looking to sell or surrender your endowment policy?

When you no longer need or can afford your endowment insurance policy, you have two options: surrender or sell it. Both options involve terminating the endowment policy, but they have different implications to you.

Surrendering your insurance policy means terminating the policy and receiving the surrender value from the insurance company. The surrender value is the amount you will receive if you terminate your policy before the maturity date. It is calculated based on the premiums you have paid and the investment returns earned by the insurer. When you surrender your policy, you will no longer be entitled to the insurance coverage or any future payouts.

Selling your insurance policy means transferring ownership of the policy to a third party buyer. The buyer will pay you a lump sum, which is typically higher than the surrender value but lower than the death benefit. The buyer will then become the owner of the policy and will be entitled to any future payouts. 

There are pros and cons to both options. Here are some factors to consider:

Surrendering your endowment policy to your insurer

Pros of surrendering your endowment insurance policy

1. You will receive the surrender value, which is guaranteed by the insurance company.
2. The process is straightforward and doesn’t involve finding a buyer.
3. You can use the surrender value for any purpose, such as paying off debts or investing in other assets.

Cons of surrendering your endowment insurance policy

1. You may incur a loss if the surrender value is lower than the premiums you have paid.
2. You will lose the insurance coverage and any future payouts.

Selling your endowment policy to a third party

Pros of selling your endowment insurance policy

1. You can receive a higher payout than the surrender value.
2. You can use the lump sum for any purpose, such as paying off debts or investing in other assets.
3. You can continue to benefit from the insurance coverage if you sell a portion of the policy.

Cons of selling your endowment insurance policy

1. The process can be complex and involve finding a reputable buyer.
2. The payout may be subject to taxes and fees.
3. You will lose the insurance coverage and any future payouts if you sell the entire policy.

Here are some key things to consider when selling or surrendering your endowment policy

1. Understand your endowment plan: Before you decide to sell your endowment plan, make sure you understand the terms and conditions of your policy, including the maturity date, surrender value, and any penalties for early termination.
2. Determine the surrender value: The surrender value is the amount you will receive if you terminate your policy before the maturity date. You can contact your insurer to obtain this information.
3. Consider the potential loss: If you sell your endowment plan before maturity, you may receive less than what you paid in premiums. This means you will incur a loss. You should consider whether this loss is worth it, especially if you have already paid a significant amount of premiums.
4. Look for a buyer: If you decide to sell your endowment plan, you will need to find a buyer. There are companies in Singapore that specialize in buying endowment plans, so you can search online or ask for recommendations.
5. Compare offers: When you receive offers from potential buyers, make sure to compare them carefully. Consider the price they are offering, any fees or charges involved, and their reputation in the market.
6. Seek professional advice: Selling an endowment plan can be a complex process, so it’s a good idea to seek professional advice from a financial advisor or a lawyer who specializes in this area.

In summary, selling an endowment policy in Singapore is possible, but it’s important to understand the process and potential implications before making a decision. You should carefully consider the surrender value, potential loss, and seek professional advice before deciding whether to sell your policy.

It is important to note that not all insurance policies can be sold, and selling a policy may not always be the best option. Before deciding to sell your endowment policy, you should carefully consider your financial situation and seek professional advice.

Partnership with Financial Advisors

While we do not advocate for policyholders to relinquish their insurance plans, in cases where a client considers this as a last resort, it becomes the responsibility of a Financial Adviser to help the client obtain the highest value for their policy.

Secondary markets for Whole Life and Endowment Policies have been established in various countries, including the UK, US, Australia, and Germany. For example, in the United Kingdom, the Financial Services Authority implemented the Traded Endowment Policy and Open Market Option Disclosure Requirements Instrument 2002. This requires insurance companies to inform policyholders who are surrendering their plans that they have the option to sell their policies in the secondary market, potentially fetching a better value.