Quick guide to selling your endowment policy - FAQ's
Why do people sell their endowment policies?
The most common reasons for selling an endowment policy are:
- Repaying a mortgage or refinancing due to the endowment not paying off the mortgage capital
- Moving House
- Divorcing, so assets need to be split
- Raising funds early rather than waiting for maturity
- Substantial debts or possible insolvency
- Redundancy, so unable to maintain premium payments
- Raising finance for home improvements
- Paying for a holiday or a family wedding.
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Is my policy suitable for sale?
Generally only with-profit and Whole of Life endowment policies are tradeable. Unit linked or "unitised" policies are based on units which are invested in stocks and shares. As the value of units can change daily, it is impossible for a long-term value to be attached to this type of policy.
Other criteria which determine the suitability of a policy, include the life company, length of time that a policy has been in force and the surrender value.
As a guide, a with-profits endowment policy that has been in force for at least 5 years, with a surrender value of £5000 or more will be of interest.
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How do I sell my policy?
You will need to provide the following information, which can be obtained from your life company.
- Name of Insurance Company/Life Company
- Type of policy (with-profits/unit-linked)
- Policy Number
- Start and Maturity dates
- Basic Sum Assured
- Total bonuses declared
- Date to which bonuses are declared
- Current Surrender Value
- Gross premium payable and premium frequency (i.e. monthly etc)
- Name and address of life (lives) assured
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How long does it take to value a policy?
If you have all of the information above, you can normally receive a valuation within two working days.
Alternatively, If you do not have the information available, we can obtain it for you at no charge and without obligation. To do that, we need your written authority via a Letter of Consent. This is a form that you can generate within the on line application process. Just click on the Letter of Consent button and follow the clear instructions. You need to print out the form, sign it, and then pop it in the post back to us (there is no postage to pay) Please note that this only authorises us to access your endowment policy information and none of your personal or financial details.
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What do I do if cant find all my policy details?
If you don't have all the information to hand we can get this information directly from your life company for you free of charge. All we need is your written permission to do this. This is called a letter of consent.
Once you have completed your contact details on our application form you will see the button to download the letter of consent, just print it out, fill it in and send it back to us and we will do the rest.
P.S. We even pay the postage for you!
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The policy is secured on my mortgage – is this a problem?
No, if the value of the policy is greater then the outstanding loan, or if the loan is being repaid or you are restructuring your finances, this would not prevent you from offering your policy for sale. We will liaise with your lender to arrange the sale.
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What happens to the policies once they are sold?
Most of the policies sold through aap are bought by large institutional investors such as Barclays Global Investors who will generally hold the policies until they mature. Once sold, you have no further obligation to pay any further premiums.
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How long should it take until I receive my cheque
Approximately 21 working days. However, this greatly depends on how quickly we receive all the relevant paperwork from you and your life office so that we can make all the appropriate checks and transfer title of the policy.
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When do I stop paying premiums on my Policy?
Normally you will be responsible for paying premiums up to the next month after the agreement date, but all this will be laid down in the offer letter we send to you.
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What is the procedure following an agreement to sell a policy through aap?
An offer letter is issued, which must be signed by the policyholder(s) in order that the transfer procedure can begin. We will then ask you to complete a simple transfer form and supply us with some simple additional information and documentation. There are no costs or charges to you and the transaction should be completed in approximately 21 days.
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If death benefits pass with the ownership of the TEP are they payable on the death of the new owner or the previous owner?
When a policy is sold the 'life assured' remains the original policyholder. If the life assured dies before the policy matures and if the life office is advised of the death, the benefits will be paid to the new owner.
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What happens if my policy is paid up?
Policies become paid up when, by arrangement with the Life Office, no more premiums are payable but the policy remains in force until the original maturity date. Such policies may still be tradable. (In which case an adjustment is made to the sum assured and/or accrued bonuses.)
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Why do you need the surrender value?
The Surrender Value is the price which a Life Office is prepared to pay for a policy. The calculation to determine an appropriate price to pay for your policy by aap is made independently of the Surrender Value. However, the price offered by aap needs to be greater than the Surrender Value and the Surrender Value is therefore a benchmark.
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