Endowment Surrender

There are many different forms of life insurance policy contracts and different terms and conditions. Many permanent life insurance contracts such as Whole Life Policies or Endowment Policies offer a feature referred to as an endowment surrender. These investment policies allow policy owners to put their money in a product that earns interest based on the market. Endowments are when the cash value built up inside the policy is equal to the death benefit. When this occurs, it is known as matured, also referred to as endowed. These policies are far pricier than temporary life but offer a versatility that term policies do not.

One option built in the terms of an endowment contract is the endowment policy surrender. This is when the policy owner technically sells back their life insurance contract to the insurer before policy maturity. This option will surrender the policy entirely and give cash for the current surrender value of the contract. For people experiencing financial hardships or in the need of immediate cash, this is a great alternative to taking out loans as you are essentially borrowing money against yourself.

There are definite pros and cons to surrendering your insurance contract. While you are not taking out unnecessary loans and digging yourself deeper into debt, you are essentially cancelling an existing policy. Depending on how long you have had this policy, there is a possibility that you may no longer qualify if you apply for a new policy, or you will be paying far more in the event that you do qualify based on your age at the time of contract.

With the market at an all time low, endowment contracts that were taken out in the 1980′s and 1990′s is more than likely not going to perform as it was estimated to. Although the market generally will balance out to an average interest earning of 12% over a period of 10 years, many people do not want to take the chance in keeping their hard earned money in an investment product that may not perform. For these people it is strongly recommended to consult an endowment policy surrender specialist before making any decisions. This qualified professional will be able to guide you in the right direction of which move may be best for your future.

While many people make investments to better their future, there are times where the market just does not perform as expected. In these situations, investing in less risky ventures is important. It is still strongly recommended to have a life policy in force. Consider converting your endowment policy to a paid up life insurance contract or, if necessary surrender your policy for cash value.

An endowment surrender is a life insurance contract that has been cashed in early. When an endowment policy is surrendered, the holder receives an amount determined by the insurance company that offered it in relation to how long the policy has existed, and how much money has been paid into it. Since life insurance is designed to pay a lump sum after a predetermined term – what is called its maturity – or the early death of the holder, cashing in early can result in being paid far less that the contract’s actual value. In addition, the policyholder will lose all benefits of life insurance protection. However, if one is in dire need of money, surrendering a policy is a feasible option.

Reasons for surrendering can vary, but usually can be attributed to unemployment, a divorce, changes to the terms of a home mortgage, or other potentially financially devastating occurrence. What many may not know, however, is that other options do exist. One can borrow against the value of the contract, either from the insurance company or from a bank that uses the policy as security. The policy can also be auctioned, but the risk always exists that the seller will get even less than what can be gained by surrendering.

Another option that is potentially more profitable than surrendering is selling the policy on the second-hand market. Through such a process, all benefits become transferred to the new owner, who then takes on the responsibility for paying future premiums and collects either the value at maturity or the death benefit if the original holder dies. Also called traded endowment policies, second-hand endowments are generally bought for more than the surrender value that one could get from the life insurance company.

There are companies out there who specialize in finding the best price for those who decide to sell their endowment instead of surrendering. One only needs to look online to start doing the research and find a company that can work with them. The endowment market fluctuates just like the stock market, so if one is able to; it is wise to wait until the market is up.

Surrendering an endowment policy should be the last resort for those who need money. Before surrendering, however, it pays to investigate all your options and find the best course of action that will work for you. It may be possible to get more money than you might think.