Insurance savings plans with 2-3 times higher returns

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During times of market downturn and instability, investors are hoping to achieve high returns from an investment which are easy to understand and does not require extensive holding periods to reap its returns.

One of such option is through Traded Endowment Policies, which is to purchase endowment policies from current policy holders who are looking at selling it to interested new owners.

Because a traded endowment is faster to maturity, the returns are compressed. Together with bonuses and interests already accumulated within the policy, the result is an endowment plan that is 2 - 3 times higher than a brand-new insurance saving plan.

What are the benefits of a traded endowment policy?

Endowment policies issued by insurance companies are low risk financial assets denominated in Singapore Dollars. They are also protected by SDIC (Singapore Deposit Insurance Corporation) which adds to their security.

There are old, highly valuable plans which are no longer available in the market today. These plans are now conserved and transferred from the original policy holder to the new investor. Rate of returns for these plans tend to hover around 4% per year annually.

Finally, there is the possibility of having a discount on capital to be received by the new investor. There is typically a loss in capital when the original investor terminates the plan early. This situation allows a new investor to buy the policy in the midway mark between the current surrender value and the original capital invested. The seller obtains more money than the surrender value, and the investor gets a discount on the capital invested.

This discount from the capital invested in the policy can range between hundreds to thousands of dollars.

What is the process of buying a traded endowment policy?

Policies are listed on the website for investors to compare and review based on their investment interest.

Upon selection of a suitable policy, an appointment is made to transact the policy legally over the counter at the issuing insurance company.

All figures on the fact sheet found online will be cross checked with the insurance company records. This includes the commencement and end date, premium amounts and maturity values.

When the investor is satisfied that all records are accurate, a set of legal assignment forms issued by the insurer will be signed by both parties. This is also endorsed by the insurer to recognize the transfer. A carbon copy of the assignment is given to the investor before payment is received.

Within 7 to 10 working days, a new certificate of ownership issued by the insurer will reach the home of the investor by mail.

How should I plan a portfolio of such policies?

There are two types of policies online, Annuities and Endowment Plans. Endowment plans provide a lump sum payment at a specific period of time, while annuities provide annual cash back to the investors over the timeline of the insurance policy.

Investors are recommended to invest in plans with different maturity dates and different insurers. By spreading their portfolio across different times of maturity, it allows the investor to build regular flows of low risk, predictable cash flow into their bank.

Investors in traded endowment plans usually gain returns ranging between 3% – 6% a year. This is significantly higher than buying a brand-new insurance policy. When the policy matures, all capital gains on it are tax – exempted.

The process is done legally at the insurer, with all facts and figures verified to ensure the comfort and security of the investor.

Tel: +65 6222 0338
Email: info@conservationcapital.com.sg
Website: www.conservationcapital.com.sg

Conservation Capital is not a regulated entity under the MAS. We are not an insurance company and there are no existing regulations which govern the sale, purchase and distribution of resale insurance policies. The transfer of insurance policies is however a formal process which is done legally at the insurance company and witnessed by the insurer.

 

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