Second Hand Endowment Policies

The only reason that there is a market for these contracts is because most companies give people less than the guaranteed maturity value on early surrender. Hence for those who need to cash in a policy early, selling at a discount to true value is often better than taking the cash value for a surrender back to the life company

Whether or not it makes sense for an investor to buy a contract depends on the details of the contract.

Only do this if you fully appreciate the details. For example, whether the proceeds on maturity are treated as your income, or your capital gain, will depend on the detailed structure and history of the policy and your circumstances.

Last updated on April 06, 2011