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Surrendering Endownments


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I have to admit I am curious about these. If you think your policy is worthless, why would someone buy it from you? Serious q btw.

Good point. There are parallels with any market - including the housing market. Look at 1995, no-one wanted housing as an investment, it was considered worthless. Time has since shown that this was the best time to buy.

As the "herd" was piling into endowments was when they were over-valued. Now the prevailing attitude amongst punters is that they are poison may well present a good buying opportunity for the astute investor (but equally, it may not - could be catching a falling knife. Point being that being unfashionable often pays a handsome dividend)

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Guest muttley
Good point. There are parallels with any market - including the housing market. Look at 1995, no-one wanted housing as an investment, it was considered worthless. Time has since shown that this was the best time to buy.

As the "herd" was piling into endowments was when they were over-valued. Now the prevailing attitude amongst punters is that they are poison may well present a good buying opportunity for the astute investor (but equally, it may not - could be catching a falling knife. Point being that being unfashionable often pays a handsome dividend)

I agree.

So which companies will benefit from buying cheap endowment policies once people decide to cash them in?

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I agree.

So which companies will benefit from buying cheap endowment policies once people decide to cash them in?

here's a good article

all sorts of companies specialise in buying, and acting as brokers for, endowment policies. Many of the big banks are doing it "on the sly" through arms-length subsidiaries, that they can distance themselves from if it goes mammaries perpendicular, but reap the harvest if it goes well. Some investors are encouraged to invest in these subsidiary companies themselves.

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I believe with profit endowments are a dead duck and will not recover.Following the stock market crash to below 3500 after the turn of the millenium the life funds' free asset ratios collapsed to near zero.(below zero in the case of Equitable Life which became a closed with profit fund).The FSA forced all with profit funds to sell equities and go into fixed income at this time to meet funding requirements of liabilities.Funds that had relied on 20% free asset ratios as a buffer against stock market correction no longer had a buffer.The FSA acted to avoid bankruptcy.The up shot was that shares recovered but funds were unable to,they now had equity exposure of only 25% as opposed to 75% pre crash.The Standard Life was the main casualty,they begged the FSA to let them keep their bullish equity exposure which had served the mutual well through decades.The FSA would have not of it,they deemed the crash in free assets from 20% to 4% to be unsafe and Standard was forced to capitulate shares at the bottom.Standard Life has since been forced to demutualise because of its troubled with profit fund.

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here's a good article

all sorts of companies specialise in buying, and acting as brokers for, endowment policies. Many of the big banks are doing it "on the sly" through arms-length subsidiaries, that they can distance themselves from if it goes mammaries perpendicular, but reap the harvest if it goes well. Some investors are encouraged to invest in these subsidiary companies themselves.

That's true, but it'll be a little complicated to sell a cheap endowment. I'm also interested on what companies can benefit from buying cheap endowments and their criteria for buying one.

Edited by Mg_NG
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