What does endowment surrender mean?

Endowment surrender takes place quite frequently, and is the act of surrendering the endowment policy back to the issuing life office for a sum of money.

Some endowment policy holders use the phrase "I want to cash in my endowment policy", and cashing in an endowment policy has the same meaning as surrendering an endowment policy.

An endowment policy is designed to run the to the full term, or maturity as it is called. However a large proportion of the financial benefits (the money received at maturity) occur at the end of the policies life. This is known as a terminal bonus, and is a lump sum of money added to the payout as a reward for staying loyal to the original concept of "with profits" from day one.

Anyone who does not go the full term loses out financially, as they do not enjoy the full benefits of the terminal bonus (the lump sum added at the end).

When a policy holder decides to surrender their endowment, they contact the original issuing life office (or whoever has now taken them over, or merged with them) to get a "surrender value". This is what the life office is willing to pay to surrender the endowment policy.

Historically the life offices have not told the person surrendering their endowment policy the alternative option of selling or trading the endowment, but the Financial Services Authority (FSA) are now the "financial watch dog" that regulate these institutions, and it is now compulsory for these institutions to inform the endowment policy holder that the "selling endowment" option exists as an alternative.

So before surrendering an endowment policy, click the FSA link above to see what Government information is at hand, and you can also use the link at the top of the page to have your endowment policy valued.

Stopping, surrendering, cashing in or selling an endowment policy should only be looked upon as a last resort, but if after taking independent financial advice the policy holder is determined to proceed, then alternative life cover should also be considered to replace the life insurance that will be lost to the policy holder when the endowment has changed hands.

Note: the policy holders life assurance will still be in force, but the new owner of the policy will be the one who collects on it, if the original policy holder dies before the endowment policy matures.

Selling endowments

Selling endowments to one of only six endowment policy traders that are  members of the Association of Policy Market Makers, can be achieved by using the "sell endowment" link at the top of the page, or by clicking here

The information on this web site is intended as "information only" and should not be taken as "advice".

If you are unsure about what to do, if anything, about your endowment policy, you should consider taking advice from an independent financial adviser who is regulated by the Financial Services Authority