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What is an Endowment Policy?

An endowment policy an investment plan (or regular savings plan) which is combined with life insurance cover. If the policyholder dies within the time period of the policy then the issuing company (generally a life insurance company) pays out the life insurance amount.

Generally, endowment policies are either Unit Linked or With-Profits.

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What is the Difference Between Unit Linked and With-Profits?

Endowment policies can be Unit linked or With-Profits. Here is the difference between the two:

  • Unit Linked Policy

A unit linked policy invests the monthly premiums into units. These can go up or down in value depending on the performance of the investment. Note that many companies do not accept unit-linked policies for selling. Check this in advance.

  • With-Profits Policy

A with-profits policy invests your premiums into a with-profits fund. This carries a guarantee which means the value of the policy cannot fall. Therefore, it is seen as a lower risk endowment policy.

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What is Selling Endowments?

Endowment policies provide people with a long term investment, yet over the past few years a growing number of people have decided to end their policy early.

The reason why a person might choose to end their policy early could be a number of reasons for example, there are people who feel that their endowment is not performing well enough, or perhaps they want to raise some capital.

You can raise money and end your policy early by either selling or surrendering your policy.

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You might be able to surrender your policy back to the life insurance company that sold it to you in the first place. Check what price they offer and if there are any penalties involved in ending the policy early.

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Another option for ending an endowment is by selling it. Selling endowments has become hugely popular in the UK because in many cases you can get a much better price by selling rather than simply surrendering the policy or maintaining one which isn't performing well as an investment.

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How Can I Sell my Endowment?

There are plenty of companies which can offer to help you sell your endowment policy. The main industry body overseas endowment-selling in the United Kingdom is the Association of Policy Market Makers (APMM). They are regulated and authorised by the Financial Services, and have a list of member companies that specialise in buying and selling endowment policies.

There are other companies that can offer to search the market and act as broker for your endowment policy selling. You can view and compare companies from both sources on our comparison page.

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What are the Criteria to Sell?

Before you decide to sell or surrender your endowment, make sure you check the policy thoroughly. This is because different endowment-selling companies have differing criteria.

In general you will need to have a with-profits or with-profits whole life policy in order to be able to sell. In addition, it may have to have been up and running for a set amount of years again, this varies.

Another requirement might be the 'surrender value' of your policy. This is the value that you would receive if you were to surrender your policy back to the issuer and in many cases must be at least 1,500. Check this during the comparison process.

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What are the Advantages of Selling Endowments?

By selling your endowment you could raise a fair amount of cash quickly this is one of the main reasons why people choose to sell their policy. In addition, the amount you raise by selling it to a third party could be much higher than if you decide to surrender it back to the issuer.

If an endowment has been performing badly then it is a relief to be able to sell it after all, continuing to pay could end up being a costly mistake.

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What are the Disadvantages of Selling Endowments?

Before you decide to sell your endowment, make sure you really consider your situation. Is your endowment really performing badly, and would you make more money if you continue the policy until it matures?

Always seek independent financial advice if you are unsure about what is the best course of action. An independent advisor can go through your options with you and help you to make the best decision for your circumstances.

If you decide to stop payments on an endowment policy then you risk losing any life insurance cover that it held. Therefore, it is vital that you seek alternative cover if you have any dependents who are relying on your life insurance.


Please Note: is not authorised to give advice under the Financial Services and Markets Act 2000.

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