Endowment policy. A good way to make money –at your own risk, and the differences between endowment policies and whole life insurance policies.

Many thinkers have talked about this century as the capital flow century. Within the globalization process started by the 90s and the neoliberal program implanted by the 80s, we’ve come to a new world where money makes everything go round, and circulates uncontrollably from one point to another on the globe –even without existing phisically: money is now numbers on a PC, travelling through the Internet. So, in this new economical scheme, enterprises are directing towards activities related to financial business. Loans, refinancing, trades, future trades, are all different forms that this situation have passed through. Yet there is one more, in which not only enterprises are involved: it is what in the world of finances is called “endowment policy”. According to wikipedia, an endowment policy is “a life insurance contract designed to pay a lump sum after a specified term (on its 'maturity') or on earlier death. Typical maturities are ten, fifteen or twenty years up to a certain age limit. Some policies also pay out in the case of critical illness”. This type of endowment gives the possibility to the person holding it to cash it earlier than agreed, in which case the company determines a value, in relation to the time left for the policy. This is usually an unliked situation, as you may lose lots of money when doing this. The one receiving the money –in this case, the company who sold the policy firstly, will get a reduced value of it: buying an endowment policy at its “surrender value” is a very fine business. But why do we say that also particulars can buy and sell endowment policy? It’s well explained by BBC News, as they inform that when wishing to stop an endowment, you are entitled to sell it to a third party, and not to a company. This is a good opportunity, in which you can get much more money than if you were cancelling the agreement with the company that sold you the policy in the first place. One drawback that people may encounter when doing this si that some buyers do ask for several requirements, being the main one that at least your policy is worth 1,500 pounds.

Getting into selling endowment policy is not an easy issue. We’ve recently talked, in other articles, about the difficulty of mortgage loans and so on, well here the situation is practically the same. You need advice, you need to be assessed by specialists, by private people , who are not related to any company, and who can give you the proper information so that you may be able to decide what to do with your policy, and how to take the best advantage for it, and the best price at which you can sell it to a third party. It is important to retain, also, that payments should never stopped being done without research and financial advice.

Endowment / Life insurance: any differences?

In practical terms, endowment policy and life insurance is the exactly the same. There is one only detail that marks the difference: in endowment policy, the advantage relies on the possibility of cashing it both when dying and when surviving. In other words: for the terms of the agreement, if the one taking endowment policy dies during the period agreed, the amount of the policy is paid; otherwise, if he survives through that period, there is also an amount arranged that is paid to the beneficiary. So the endowment policy is perceived as a benefit for life.

What people should be aware of is the advertising campaigns raised by the companies that want them to sell their endowment policy to them. In Policyplus.com, you can see that a testimony of a seller says “on average, people receive 1,500 more cash by selling their endowment than surrendering”. Lots of companies are on the market, trying to trap you and get what they want from you: your endowment policy, so they can sell it to others. This is what they call Trading Endowment Policies. Investing in TEPs (Traded Endowment Policies).

What enterprises lik PolicyPlus do is “trade traditional policies from leading insurance companies, which offer a unique mix of capital guarantees and potential for future growth” (policyplus.com). of course, this is accompanied by “bonuses”, guaranteed sums and so. The business for them relies on the quantity of sellers and buyers: it’s like the banks, they sell dollars at one price and buy them at another. So here the reasoning is the same: they buy your endowment policy, just to sell it at a higher value to another buyer. And viceversa.

Getting in the market o endowment policy can be very satisfying, as it is a very well developed market. But getting into it without advice or proper care can lead to terrible losses of money. That’s why you should always be aware of this, as if you sell your endow and then want it back, it will be just too late. Do remember that there will always be buyers and sellers, so companies wil never have mercy or pity through you, and will never consider giving to you a better price, as they will know there will always be demand enough to meet their needs.

In conclusion, endowment policy is another big business of the world of finances, and it’s not at random that most enterprises invest on them, even though they come from other fields. Most of endowment policies also get into the stock market, and are traded at different values. Then we can discuss if it’s fair or not to be against them, but be sure that in any time you give the companies a space to take advantage of you, they will surely use it. They are always aware of that, and won’t let an opportunity untaken. So that’s you who has to be even more aware, and choosing very properly which company are you taking when selling or buying an endowment policy.