Traded Endowment Market

The market in second-hand traded endowment policies is now over 150 years old and until relatively recently was mainly conducted through an auction house. The phenomenal increase in turnover has been brought about by the very strong demand for Traded Endowment Policies (TEPs) not only from UK and offshore individual investors but also from pension funds, specialist investment trusts and offshore investment funds.

The traded endowment market exists because the majority of people who take out endowment policies do not hold them to maturity - many are surrendered in the very early years before acquiring a surrender value. Most are surrendered or sold later by the original policy owners because of changing circumstances; alterations to mortgage arrangements or divorce are two of the main reasons. As more of these policyholders become aware that they may achieve a higher price selling their policy on the second-hand market, rather than surrendering it back to the insurance company, the number of policies available for purchase has increased dramatically over the last few years.

There would not be a second-hand traded endowment market in traditional with-profit policies if there were not as many people wishing to buy policies as there are people wishing to sell policies.