Endowment Investment TV

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The general view of investing in Endowment Policy



Endowment Policy

The endowment policy is a type of life insurance policy that designed to pay a lump sum at a certain time or if the person dies an endowment policy may mature at ten, fifteen, or twenty years and some of these policies may also provide money if there is a serious illness. Endowment policies are generally the traditional with-profits or unit-linked and with unitised with-profits funds.


Surrender Value and Adjusted Market Value

Endowments can sometimes be chased early or surrendered early and the policy holder receives the amount of the surrender value determined by the insurance company. How much is received is going to depend on how long the endowment policy has been in effect and the amount paid in to it. Under bad investment conditions the encashment or surrender value may be reduced by a market value adjuster to squeeze out some cash during the time when investment conditions are not good and this means the investor will received only the surrender value minus the adjusted market value.

Some consumers might choose to sell an endowment policy to save for retirement

Publication date | 30/07/2010

New legislation which sees the Default Retirement Age (DRA) made obsolete could result in people having to work longer to save for their retirement.

More consumers may have thought about selling an endowment policy to free up cash which they could set aside for their later years as a result of the Conservative-Liberal Democrat government announcement.

Martin Palmer, head of pensions marketing at Friends Provident, said workers need to take control of their available cash and think about how they can provide for themselves when they do choose to retire.

The new guidelines prevent employers from being able to force a worker to retire at 65 and removes the right to request administration duties for anyone who wishes to stay in their existing role.

Chris Radford, chief executive officer of aap, the UK's biggest buyer of endowment policies, said some of its customers who were concerned about how the changes would affect their future cash flow had decided to sell their underperforming endowment policies.

Are you worried about your financial future?

Friends Provident pointed out that although many people will be able to continue in their employment if they wish, some might not be fit to work as they get older.

Indeed, those who do plan on keeping their jobs should "not use this as an excuse to put off saving for retirement", Mr Palmer continued.

The new ruling could be good news for employers looking to retain valuable staff members with many years of experience and expertise to offer although some industries may be able to escape the legislation if they can justify age would be a detriment to the business.

An example of this situation could be the police force or air traffic control.

Anyone concerned about how the announcement will affect their finances in the future could do well to seek advice on selling an endowment policy, as it could provide additional cash they need.

Selling endowments could provide additional savings

Mr Radford, from aap, said some of its customers who were worried about providing for themselves and their families after the DRA is scrapped had decided to sell an endowment policy to provide them with more money.

He added that should aap make an offer to purchase an endowment policy, it will always pay more than the surrender value offered by the insurance company.

From aap published on 30/07/2010