By Robert Prime
What is an Endowment Policy?
An endowment policy is a life insurance policy that agrees to pay a particular amount of money either on the maturity date mentioned in the policy or on death of the policy holder, whichever is earlier. The time period that a policy covers may vary from policy to policy and the benefits are tax free. An insured has the right to surrender or sell his policy in mid-term incase of financial need. But an early surrender of insurance policy may fetch the policy holder a lesser amount. Hence, it is favorable to sell the policy after a certain specified time period in order to get higher amount from the sale of the policy.
Types of Endowment Policies
— Non profit Endowment Policy: In non profit endowment policy, a lump sum amount is promised to be paid at the time of maturity or on death of the policy holder whichever is earlier.
— Traditional with profits Endowments: This policy assures a sum of money that will be paid at the time of maturity or death of the policy holder. The amount of the policy increases as the policy holder gets regular / reversionary bonuses. These are guaranteed bonuses that the policy holder receives. In some cases, a non-guaranteed bonus known as terminal bonus may also be paid at the expiration of the endowment policy. People generally buy such endowment policy with a specific objective, which could either be repaying a mortgage or for regular income.
— Low Cost Endowment Policy: This policy is a combination of traditional with profits endowment, where estimated growth rate will meet the mortgage amount and reducing term assures that the target mortgage amount is paid as minimum in case policy holder dies. If the sum has risen at a particular rate then the amount will be enough to pay the outstanding loan. But in case the bonus rate falls, there is no guarantee that the return will be sufficient to meet the outstanding mortgage. This policy gives a guaranteed level of death benefit that makes enough to pay the outstanding loan.
— Unit Linked Endowment Policy: There is no fixed amount promised at the time of policy maturity in this policy. The time period of policy and mortgage period are equal. The premiums are used for investment in units of policy holder’s choice. These units are further cancelled to buy the life cover. The maturity value of the policy depends upon performance of the units and there is no surety that the returns would be enough to repay the loan. But in case the policy holder dies then a guaranteed amount equivalent to the outstanding loan amount is given.
— Traded Endowment Policy: This can be well understood as a second hand endowment policy. Here the policy buyer purchases the policy at a price higher than the surrender value offered by the insurance firm because the policy will for sure fetch the buyer a higher amount at the time of maturity. The rights and benefits of the policy get transferred to the buyer. In case the actual policy holder dies, the buyer gets full benefit from the policy without any claim from the beneficiaries of the deceased.
Where to Buy and Sell Endowment Policies
When the need arises for buying and selling endowment policies there are a number of intermediary companies that help you get the best deals for selling and buying endowment policies. It is better if you contact an endowment selling and buying firm because they advice you the best regarding whether to sell your policy in the open market or surrender it to the insurance company. These broker firms search the best buyers for your policy and help you to get a true value of your policy.
Endowment-policy.co.uk is one such dedicated website with high expertise in selling endowment policies. They offer services for selling or surrendering your endowment policy at best value. This company is reliable and helps you to maximize your profits. For further details, visit http://www.endowment-policy.co.uk
About the Author: Robert Prime is a professional author who has written many articles on various topics & this time writing article on Types of Endowment Policies. For more details about Types of Endowment Policies visit: