An endowment sale is when a policyholder sells their regular savings and life insurance policy. It can be done personally or through an auction/market maker. There are two types of policies: unit-linked and with profit. Cashing out should be considered carefully, with alternatives explored first.
An endowment sale is a transaction that takes place when an endowment policyholder decides to sell the policy. An endowment policy purchaser is the entity that purchases the endowment, usually a company that specializes in this type of purchase. An endowment policy is a regular savings or investment plan combined with life insurance in one policy. If the owner dies before the policy reaches maturity, the endowment policy’s life insurance company pays a set amount of money.
There are several ways an endowment sale can take place. First, an endowment sale can be handled personally, with the policyholder contacting an endowment buying company. This type of endowment sale is fairly easy to complete and most financial advisors will walk the policyholder through the process.
Another way to complete an endowment sale is at an endowment auction, or through what is referred to as a market maker. A market maker is a window through which endowment policy traders can bid to buy policies. It’s similar to the stock market, but on a much smaller and calmer level. In this type of endowment sale, the policy trader can buy the policy and get a better price by offering it on the open market.
There are two main types of endowment policies: unit linked and with profit. A unit-linked endowment policy has monthly premiums that are invested in units. The value of this policy may vary depending on the performance of the investment.
In case of strong economic growth, a unit linked endowment policy is the best option. If the market is down, however, so is the value of the endowment. The current value of the policy has an impact on the outcome of the endowment transfer.
The most traditional endowment policy is the profit variety. This type has a guaranteed value and will never go below a specific amount. This is the safest way for those who are not willing to take a risk with the unit linked policy.
Cashing out an endowment policy is a big decision. There are many alternatives to an endowment sale worth exploring before taking such a big step. Most people seek an endowment sale due to drastic changes in their circumstances, such as divorce or a change in mortgage arrangements. More recently, a short-term projection by the issuer of the endowment policy has become another reason to make an endowment sale.
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