Trading in insurance windfalls

Article Abstract:

Demand for second-hand endowment policies has risen in the UK, and investors may also benefit from windfall gains paid by mutuals being taken over or carrying out a flotation. The life insurance industry is undergoing rationalization. Insurers that could be involved in flotations or takeovers include Scottish Widows, Friends Provident, and Scottish Amicable. Windfalls have tended to be offered as a rise in the policy bonus, rather than cash, and investment performance should carry more weight than a possible bonus.

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No surrender

Article Abstract:

The UK market for second-hand endowment policies has increased, and investors see such policies as a tax efficient vehicle with a low risk level. There is also interest in policies from companies that may lose their mutual status. Bonuses have fallen and may rise, and this has led to increased interest in endowment policies. There are also investment trusts that specialise in second-hand endowment policies. These policies represent a long-term investment rather than a vehicle for short-term gain.

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With and without performance

Article Abstract:

The performance of British with-profits endowment policies for 25-years is examined in detail.

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