Calculating the value of an endowment policy is very easy if it a unit linked endowment, but very complicated if it is a with profits endowment.

 A unit linked policy is made up of a number of units, all of which have a price per unit. It is a simple matter of multiplying the number of units held within the policy by the bid price of the units at the time. The bid price fluctuates day on day, so the valuation is only true at that particular point in time and it will have a different value on another day depending on how the price of the units have faired in the day to day dealings of the investment markets. There are two types of units in any unit linked endowment policy, the initial units that were allocated when the policy was started, and accumulation units that are added afterwards. Both have a different bid value so have to be valued separately then added together to give the total value. If someone is surrendering unit linked endowment policies the money they should get in return will be the bid value of all the units on the day, less any administration expenses, commissions etc.

Calculating the value of a with profits endowment policy is nowhere as easy as explained above. A with profits endowment policy is made up a guaranteed sum assured, plus annual reversionary bonuses added each year (depending on how well the overall with profits fund has performed - lately a number of with profits life assurance companies have not added any annual bonuses at all!) and a terminal bonus added at the maturity date of the policy (when it is due to end). However, if someone is surrendering their with profits endowment policies then the actuaries that look after the with profits fund have to calculate the effect of this action on the overall potential profitability of the fund, given that it was assumed the policy was going to go "all the way" and this early withdrawal of regular premiums will have an adverse effect on the policy holders that remain in the fund.

It is the attractiveness of the historical sizes of some of the terminal bonuses and the smooth investment performance of the with profits endowment funds that makes the buying up of second hand endowment policies a profitable endeavour for some canny investors.

The very fact that some individual investors, and some very large institutional investors, are drawn towards buying up theses unwanted second hand with profits endowment policies means that any individual person that is considering surrendering their with profits endowment policies should have them valued independently by the endowment policy traders. This can be achieved by using the "value my policies" link on the left.

After calculating the value of the endowment policy, either an offer will be forthcoming that is in excess of the surrender value, or no offer will be made. That still leaves the policy holder with some choices to make, but at least they are one step further forward to calculating the endowment policy value and can decide whether to continue the policy, surrender or sell.

"Selling endowment policies is no more complicated than surrendering endowment policies"