How To Sell Endowment Plan
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You terminate the insurance plan and retrieve your money when you choose to surrender. The amount you get equals to a percentage of the total premium you paid, after deducting the first year’s premium. The percentage differs from one insurance company to another and will be mentioned in your policy wording. If you surrender your policy before three years of paying premiums, most insurers will not pay anything back.
Making An Endowment Policy “Paid-up”
If you do not close the policy but stop paying the premiums, your policy becomes “paid-up”. However, this is possible only after you have paid premiums for at least three years. The number of years will depend upon your policy terms. You can ascertain the exact number from your policy document. You will receive an amount at the end of the policy tenure, called the paid-up value, which will be lesser than the sum assured.
Which One Should You Choose?
Within two years of purchase, it is best to let the policy lapse. You will lose the entire sum you paid as premium. However, you can utilize the freed-up funds to invest in a better financial instrument and build a corpus.
When Surrendering Is The Best Option
If there is still a long time until the policy matures, it will be preferable to surrender your endowment policy. You will incur losses. Close to the commencement, most insurers will offer a surrender value of only 30% of the total amount you paid as premium. Still, if you invest the sum in a high-performing investment tool, you can more than recover the loss. Moreover, the surrender value can go up depending on the number of years that have passed since you bought the policy. Higher the period of holding, higher the percentage you get as surrender value.
Converting it to paid-up at this stage will cause you further loss when you factor in inflation. The sum you receive at the maturity of the policy may have no significant value at that time.
Conclusion
When you do not wish to continue paying the premium, and maturity is only a few years away, you might want to choose the paid-up option. You will enjoy insurance coverage until maturity and receive accrued bonuses, if any, at the end of your policy period.
Also read: What Is the Best Way to Compare Endowment Plans Online?
