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Traded endowment policy (TEP) enquiries rocket by over 50%

The Financial Services Authority (FSA) ruling PS106 came into effect on September 1 2002 to ensure policyholders seeking information on surrendering an endowment policy are advised by their life company of the option to sell it.

This has had a marked impact upon enquiry levels to the UK&#39s leading TEP Company, Surrenda-link, with over 50% rise between August and September.

Surrenda-link believes this growth in awareness could benefit investors, with more policies available on the TEP market for investors to choose from. Surrenda-link advises more TEP funds by value than any other market maker. These include both on and off shore funds including a hybrid fund investing in both property and TEPs.

Despite the gloom in the equity market a diversified body of TEPs offered in a TEP fund, generates good returns and continues to grow at a rate of nearly double that of high-street savings accounts.

The smoothed structure and diversified asset base of TEPs has helped to maintain their strong performance. Since November 7 1999, the FTSE 100 has fallen 34%. In comparison the average annualised return across all funds (both onshore and offshore) advised by Surrenda-link remains a healthy 8.6%.

Prior to September, a life company was under no obligation to inform policyholders of the existence of the TEP market, even though they may get more for their policy by selling it via the TEP market.

Matthew Roche, marketing manager at Surrenda-link, says: “The total market for traded endowment policies is worth an estimated £1bn a year. Last year, approximately £500m worth of policies were sold via the TEP market, which means that 50% of those selling their policies still missed out by surrendering and not selling.

“Although awareness of the TEP market has grown considerably over the last few years, many endowment holders still surrender their endowment policy rather than sell it and potentially lose out financially as a result. Selling rather than surrendering an endowment policy could give consumers more money. In some cases selling a policy can bring you as much as 30% more than the surrender value.”


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