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Surrenda-link Survey Reveals Almost a Third of Endowment Policy Sales are Driven by Cautious Return Predictions

Traded Endowments specialist, Surrenda-link, reports that almost a third of customers selling their policies are doing so due to concerns about poor performance, compared with original sale projections provided at the time of purchase.

In an in-house survey, Surrenda-link, the endowment trading arm of SL Investment Management, asked its customers why they wished to sell their policies:

  • 31 per cent said that their main reason for selling was due to performance predictions being considerably lower than predicted at the time they bought the policy.
  • A further 26 per cent wanted the money for renovation and DIY projects in the home.
  • And 15 per cent of customers planned to reduce their mortgage and other overheads.

However, outside the three top answers, Surrenda-link (which has been trading endowment policies since 1990), claims that people’s reasons for selling are many and varied and include; raising cash to fund divorce, relocation or retirement; paying for school fees, help with cash-flow following a period of unemployment and other ‘personal reasons’ not specified. [Source: SL Investment Management]

SL customers’ reasons for selling endowment policies

% of policy sellers interviewed

'Performance watchers';   concerned about comparative lack of performance

31%

'Home improvers';   wanted the money for renovation in the home

26%

'Debt cutters';   looking to reduce mortgage and other overheads

15%

'Other';   non-specific cash boost

10%

'Asset splitters';   couples reviewing finances due to divorce

5%

'Career crunchers';   needed to raise money due to unemployment

5%

'Home movers';   funding moving costs

3%

'Retirement fund boosters'

2.5%

'School fee funders'

2.5%

Total

100%

Surrenda-link reports a busy summer and on the buy-side, demand for policies remains high; those taken out with Clerical Medical, Friends Provident, Legal and General, Prudential, Scottish Amicable and Scottish Widows maturing 2015 and beyond are of particular interest.

Today, the total UK with-profits market is worth an estimated £330 Billion and made up of around 25 million policy holders. Surrenda-link believes that analysis of Life Office 2012 FSA Returns indicates that around ten per cent of this market place is made up of conventional and tradable with-profits policies.

Many will remain in force but for people in need of a quick cash injection, whatever the reason, these forgotten funds can be the solution. Sellers can typically expect 5-6 per cent more by selling a policy than by surrendering it back to the life office. The average sum paid out by Surrenda-link, above surrender value, is a healthy £1,160.

Alec Taylor, Surrenda-link’s Head of TEPs, says: “Well over a million policy holders have desirable, tradable endowments that they may no longer need or want, so we may only be seeing the tip of the iceberg in terms of people cashing in on old policies.

“The indications are that many people who have with-profits policies don’t want to wait around and see what final bonuses will deliver – instead they are looking for certainty, speed and an attractive price. TEPs continue to provide a fast and painless way for people to raise a lump sum as and when they need it, to be used exactly as they wish.”

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