To surrender or not - Endowment Policy
 

Just wondering if anyone can offer a bit of advice?

We have a with profits endowment with 6 years left to run - do we surrender it or keep it running? Insurance company said it's okay to keep running from a canadian address.

I have tried to sell it for a bit more than the surrender value, but no one wants it at the moment:thumbdown:

I'm a bit worried about the amount of tax we will have to pay on any increase in value & final bonuses - if any.

Re: To surrender or not - Endowment Policy
 

I don't know how long the policy has been running, but six years left is not a lot if you can afford to keep paying it. It's probably done most of the hard work already .... is it at least on track to pay out the initial sum?

Re: To surrender or not - Endowment Policy
 

Assuming you are about to leave the UK for Canada soon, you will pay tax in Canada on half of [final payout - surrender value now - any futher premiums you pay up to payout].

If your tax rate is 30% you will effectively pay tax at 15% of any profit you make between now and payout. In other words you will get to keep 85%. I don't see a problem. Just keep a record of the current surrender value.

Re: To surrender or not - Endowment Policy
 

We sold our policies on to a UK company back in 2007 and took the money here and bought our house outright with our equity and policy money. Paid no tax to anyone.

Note that your policy will probably have life insurance attached to to it so it's wise to check with your endowment company as to whether they cover you if you are resident overseas. :)

Re: To surrender or not - Endowment Policy
 

We didn't pay any tax either. It was part of the $$$ we told CIC that we were bringing over. maybe this makes a difference

Re: To surrender or not - Endowment Policy
 

Did dispose of it prior to landing or after? Not paying any is not the same as not owing any. If CRA determine at any time you should have paid then they can come after it at any time. Keep all the paperwork, if CRA say you owe tax it is up to you to prove you don't.

Re: To surrender or not - Endowment Policy
 

Thanks everyone for your replies.:)

I think it might be easier to surrender it before we arrive!

Re: To surrender or not - Endowment Policy
 

It was part of our money transferred from the UK along with our equity. We also sold shares from my husband's employer (KBR) prior to moving to and took that along too (have to sell if you leave their employment - exempt from tax after X amount of years invested).

We arrived on a WP and wasn't told any different and declared the all the money transferred from the UK to Canada. :)

PS I read, possibly on BE, that if we let the policy run after landing then X amount of time later we would have to pay some kind of tax on it. Another reason for cashing it in was because having the money meant no mortgage over here.

Re: To surrender or not - Endowment Policy
 

Why? If you don't need the money now you will only pay tax (at a low rate) on any future profit you make (likely the terminal bonuses).

Keep the policy then you get to keep most of the profit.

Surrender the policy and you pay no tax, but you don't make any profit either.

Re: To surrender or not - Endowment Policy
 

Thanks Jonboye

Making me rethink it now - we lost about £3k in the past year on it so it might be an idea to leave it be to the end of the policy as we don't need the funds at the moment.

Same with a few shares we have gathered - heard that they are more trouble than they are worth - tax wise - problem we've got though is the certificates are on the boat at the moment...:o

Re: To surrender or not - Endowment Policy
 

We have been here two years and left our endowment being paid by DD from a uk bank account it matures next year ~ There is no problem what so ever in keeping it running. If we have to pay tax on it when it matures then so be it. We will have the cheque paid into the uk bank and make a fortune when the exchange rate improves !! !!

Re: To surrender or not - Endowment Policy
 

A currency again, the tax man gets a chunk of that too!

Re: To surrender or not - Endowment Policy
 

We did have three to surrender in the UK. The first one surrendered two weeks ago:rofl: we had the money paid straight into the UK bank account so there is money in there to pay for the other two which will not surrender until 2014.

We were told that we do not need to pay tax in canada on it by a canadian accountant. The money is tax free from the uk and is staying in the uk.

When the other two surrender in 2014/2015 then the money will probably be coming over to cover university fees:eek: but again we have been told it is tax free.

I suppose in 5 years time we will have to renew and think about it all then.

The surrender that we did two weeks ago was fairly harmless, just a few forms to fill in asking where did i want the money sent to,

Re: To surrender or not - Endowment Policy
 

In a similar position and trying to decide to sell on or surrender endowments, so really interested in discussion, please let me know what you decide, its all so complicated!!
Kate

Re: To surrender or not - Endowment Policy
 

Is it not the case that although in the UK your money is classified as tax free... wont the canada tax people consider the money as part of your worldwide income, even if you leave the money in the UK, and it will need to be taxed...this is presuming you have made a gain on the endowment since you have been living in canada.