In one case, a saver with an endowment policy from Royal Life, begun in July 1975, with seven years left and a monthly premium of pounds 7.29, was quoted a surrender value of pounds 3,109 by the insurance company itself. This rose to pounds 3,600 from a firm that specialises in buying second- hand policies - an improvement of about 16.5 per cent.
Trawling through other companies, called market-makers, would have produced even more impressive results, with a top offer of almost pounds 4,400 - a total increase on the surrender value of more than 41 per cent.
Colin Jackson, managing director at Baronworth, said: 'There are now about 20 firms willing to buy suitable policies for a price higher than the surrender value. They then sell them on to investors who carry on paying the premiums until the policies mature and they get the proceeds.
'But not all market-makers will quote for all policies, and even then they won't offer the same price. So if endowment holders go to one market-maker and the firm is not prepared to buy that policy or quotes a low offer, they may think that is all they can get for it.
'Unless they are prepared to shop around they could miss out on hundreds or even thousands of pounds above a policy's surrender value.'
To prevent this, Baronworth trawls all market-makers to see what they will bid for a policy.
David Beale, a partner at Beale Dobie, said the price companies were prepared to pay reflected past returns on a policy and a calculation of future gains. Most market-makers' prices are bunched fairly close together.
Low prices often reflect the fact that the buyer is not really interested in that policy unless it can be picked up cheaply.
Mr Beale added: 'If a market-maker has an individual client, with a specific requirement, who is buying directly off him, it may be that he will make a better offer. Or it may be that, if they are buying for an investment trust, as we do, they are looking for policies maturing after 2001.'
Paul Sands, chief executive at Surrenda-Link in Chester, said he sometimes pays more because his company is paid a fee by an investment trust and does not have to set such large margins between asking and selling prices.
'Another thing to watch is the point at which a company will take over the regular payments on the endowment. Companies like ourselves will cover any arrears, and quote accordingly. Others may quote a higher price but the former policyholder has to pay the arrears himself. In the case of a high- premium policy, that can be a lot of money. It always pays to check the small print.'Reuse content