Here’s How You Can Sell Your Insurance Policy in Singapore
You were probably told to buy insurance policies, but did you know that you can also sell insurance policies?
Understandably, certain situations that arise may cause you to consider terminating your insurance policy.
For example, you may be in need of cash urgently, and/or can no longer sustain the policy.
Another possibility is that your policy has reached a break-even point (i.e. cash value of policy = premiums paid), thus you wish to discontinue it. This is especially if the insurance coverage does not seem to be as desirable anymore.
To terminate or discontinue your insurance policy, you generally have two options:
- Surrender your policy; or
- Sell your policy.
This article will discuss the sale of insurance policies in Singapore.
What Happens When I Sell My Insurance Policy?
When you sell your insurance policy, this policy is being transferred to a third-party who will then take over your obligations (e.g. continue to pay the future monthly premiums).
These third-parties can either be the vendor/broker you sell your insurance policy to (e.g. marketplaces that sell or buy insurance policies), or a party sourced by the vendor.
In exchange, you get monetary benefits according to the broker’s valuation of the insurance policy at that point in time of selling it (i.e the policy’s current value).
When deciding whether or not to sell your policy, these considerations should be kept in mind:
|You get paid a higher value than surrendering your insurance policy.||You will lose the insurance coverage once the policy is transferred.|
|You will receive upfront payment (either in cash or cheque).||If the policy you are selling is a life policy, a third-party may benefit upon your death.|
|The selling process is relatively simple and fast to complete.||The sale of insurance policies is not regulated by the Monetary Authority of Singapore (MAS), though the assignment itself is a process recognised by the insurer.|
What Types of Insurance Policies Can be Sold?
Generally, endowment and whole life policies can be sold, as they are assignable.
Endowment policies are also known as Insurance Savings Plans. A policyholder typically pays a monthly or yearly fixed sum, until the policy matures (i.e. when the policy ends).
Upon maturity of the policy, if the policyholder outlives the maturity date, he/she will get back the guaranteed sum of money, also known as the maturity benefit. If the policyholder passes away before the policy matures, coverage will be provided for his/her dependants.
Whole life policies, on the other hand, are designed to provide coverage for the policyholder’s dependants after his death, typically in the form of fixed payouts.
How Old Does the Insurance Policy Have to Be Before I Can Sell It?
For endowment policies, third-party vendors may be interested to buy them if you have held the policy for at least 1/3rd of its duration. However, the vendor may be willing to take over a newer policy if it is:
- Limited pay (e.g. the premium payments are front-loaded to the first 5 to 10 years of the policy’s life, for a 20-year policy)
- Single premium (i.e. the premium payment was made in a lump-sum at inception)
Can I Still Sell My Insurance Policy If I Had Missed Out On Premium Payments?
Whether you can still sell your insurance policy if you had missed out on premium payments would depend largely on the extent to which you had defaulted on these payments, such as the length of the period of default and amount overdue.
Generally, insurance policies have a grace period of up to 30 days to make payment from the previous payment due date missed. Failure to make payments by the end of the grace period will either result in:
- an automatic premium loan (APL) being imposed by the insurance company
- or in the policy lapsing.
Whether your policy is imposed with an Automatic Premium Loan or lapses depends on the value of the unpaid premium relative to the cash value of the policy.
If your policy has an Automatic Premium Loan, your policy is still in force and it may still be possible to sell your insurance policy. Any outstanding Automatic Premium Loan will be taken into consideration when the third-party vendor makes a valuation of your policy (i.e. you will likely get a lower amount).
If your policy has lapsed, it will likely have to be reinstated before it can be assigned to a broker.
How Do I Sell My Insurance Policy?
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While your first thought on the process of selling your insurance policy may be to head down to your insurance company, this is required only later on in the process.
Instead, you should first obtain a valuation that you are satisfied with by approaching one or more third-party vendor(s).
The following outlines the flow of selling an insurance policy:
- Source: Find a suitable and trustworthy third-party vendor in the market.
- Valuation: Send in the relevant information required by the vendor for valuation. The insurance policy itself is the most crucial piece of document required for valuation. It should include information such as the start and maturity date, premiums, sum assured and surrender value (see below). Vendors generally offer the valuation for free.
- Review offer: The vendor will get back to you on the offer they wish to make. At this point, you may choose to proceed with the sale.
- Transfer: The transfer of policy ownership will be done directly at the insurance company, and can be completed within 30 minutes. Once this is completed, you will no longer have any outstanding liabilities under the policy.
- Payment: Depending on the vendor, you will receive upfront payment either in Paynow, bank transfer, or cheque.
Alternatives to Selling My Insurance Policy
Surrendering my insurance policy
As mentioned earlier, if you are looking to terminate your insurance policy, the alternative to selling it is to surrender your insurance policy.
Surrendering a policy involves you directly terminating your policy with your insurance company. When this happens, you will lose all the benefits under the policy.
Just like selling, surrendering your insurance policy may also allow you to receive a sum of money. This is known as the cash surrender value. However, this entitlement is dependent on your policy type.
Here are some pros and cons of surrendering your insurance policy:
|Relatively easy and straightforward process, which mainly involves you contacting your insurer directly.||The policy type may not entitle you to any cash surrender value. For example, whole life insurance comes with a cash surrender value, but not term life insurance.|
|The selling and assigning of an insurance policy may let a third-party benefit from your (i.e. the insured’s) death. By surrendering your policy, there is no such discomfort since all the benefits under the policy cease to exist.||The cash surrender value (if any, to begin with) may not be as attractive as the cash back value offered by third-party vendors who buy insurance policies.|
|If you wish to buy back the insurance policy again in the future, the insurance company may not offer you a similar level of protection or returns for the same policy type.|
What Happens If I Had Included My Insurance Policy in My Will?
In the event whereby you had previously included the insurance policy (which you have sold or surrendered) in your will to gift the insurance proceeds upon your death, this gift will be void.
This is because the insurance policy has been discontinued (whether through surrender or sale) and no longer exists as described or intended. Nonetheless, you could, for instance, include an alternative clause from the on-set when creating your will to cater to such a situation.
In order to better ensure that you have provided for the possible circumstances that may arise in relation to your insurance policies, consider obtaining professional legal advice from one of our wills lawyers to assist you in your will-making.
You may also refer to our article on distributing insurance proceeds via your will.
Urgent times, such as you being in need of immediate cash, may call for expedient decision-making. However, bear in mind the pros and cons of both selling and surrendering your insurance policy, and the the current benefits of your policy, before making a decision on which option to adopt.
If you have an endowment policy that you’ve decided to sell, consider selling it to Endowment Exchange. Endowment Exchange buys over existing endowment policies at prices higher than their surrender value, giving you more cash than if you were to surrender your policy to your insurer.
From now until 31 December 2023, SingaporeLegalAdvice readers stand to gain a cash benefit of up to $100 (on top of Endowment Exchange’s offer price) for selling their endowment policies to Endowment Exchange. To qualify for this promotion, quote “SingaporeLegalAdvice” in the “How did you hear about us?” field of the quote form. You will also need to email a copy of the completed Sales & Purchase Agreement to firstname.lastname@example.org after selling your endowment policy to Endowment Exchange.
Terms and Conditions
1.1 The “Gift” refers to (up to) S$100 in cash.
1.2 The “Cashback Schedule” refers to the following:
|Policy’s Surrender Value
(at the time of policy reassignment)
|S$20,000 and above||S$100|
1.3 The “Promotion Period” is between 11 November 2023 – 31 December 2023, all days inclusive.
1.4 “Eligible Applicants” refer to individuals who meet ALL of the following conditions:
- Applicant was referred from SingaporeLegalAdvice.com. Applicant had submitted his/her contact details, policy details AND indicated that SingaporeLegalAdvice.com was the referral source, when submitting a price quotation request to Endowment Exchange. The price quotation request may be sent via:
- Executed a successful policy reassignment with Endowment Exchange.
- Emailed a copy of the completed Sales & Purchase Agreement to email@example.com (Applicant may redact any confidential information from the Sales & Purchase Agreement before emailing it to SingaporeLegalAdvice.com)
1.5 Completion of policy reassignment must be done before 31 December 2023, 2359h. Approval of the Gift for any policy reassignments after the cut-off time will be subjected to final approval by SingaporeLegalAdvice.com.
1.6 The credit of the cash rebate will be made via PayNow or Bank Account transfer. The Applicant will be required to confirm their PayNow or Bank Account details via an email.
1.7 Eligible Applicants will receive the Gift within a month of confirming their PayNow or Bank Account transfer details. Applicants who have yet to receive the Gift within that time may contact us via email at firstname.lastname@example.org
2.1 The promotion is open to all individual Singapore citizens and residents of the Republic of Singapore who are (i) aged 21 and above at the time of policy reassignment (if the Participant is under the age of 21, consent had been sought from parents or legal guardians before participating or submitting any personal information), (ii) not prohibited in any manner by any person, entity, authority or law from participating in this promotion or any similar promotion.
2.2 SingaporeLegalAdvice.com reserves the right to reject any claims of eligibility for the Gift if the application was found to be made via other channels.
2.3 In the event of any dispute, SingaporeLegalAdvice.com’s decision shall be final and binding, including determining whether a claimant or claim is eligible under these Terms.
2.4 SingaporeLegalAdvice.com reserves the right to change, add, cancel and otherwise modify any of the above Terms and Conditions stated above at any time without prior notice.
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