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British Traded Endowment Policies
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Editorial

An ideal investment should always follow three rules:

1. highest possible security
2. highest possible yield
3. highest possible liquidity

An investment to meet all criteria is not possible, you can not invest with the highest yield at the lowest risk and still have your capital readily available.

When investing one should try to meet above criteria as much as possible. In view of this it is apparent that an investment in British Traded Endowment Policies meets these objectives in an ideal way.

Many governments will in future not be able to provide pensions to its citizens to secure a satisfactory standard of living - higher life expectancy will lead to more pensioners to be taken care of by contributions of a smaller work force. Early arrangements for a private pension seems to be the only way of providing sufficient financial resources and therefore guarantee the living standards of pensioners.

Our program of the "Never Ending Pension" is a perfect solution even for younger Investors to provide a safe and secure private pension or an extra income. This Guide details all aspects of such an investment.

Traded Endowment Policies have yields much higher than compared to gilts or treasure bonds, risk is minimal due to the excellent credit rating of Life Offices. The Investment is in Pound Sterling and the booming British Economy makes currency fluctuations very unlikely.

We wish you personally very much success for your investment and invite you to contact us for any further questions!

British Endowment Policies
An introduction to British Traded Endowment Policies.

Endowment Policies have been around in Great Britain for more than 150 years as an attractive form of saving and building of capital. Solid and reliable life insurance companies with an excellent credit rating and earning records are offering these Endowment Policies. Customers have been buying such policies for securing credit with a building society, for private pension planning, to secure capital for children when they finish school or simply for a very secure form of saving with excellent yield.

When an Endowment Policy is first taken out, the sum assured, the term of the policy up to the maturity date and the monthly premiums are determined. The policy is terminated upon the death of the policy holder before maturity date or when the maturity date is reached.

Investment in Traded Endowment Policies:
More than 150 year ago when Endowment Policies were first issued the mortality tables were overestimated and as a result significant profits accrued with the Life Offices. These extra profits were returned to the policy holders as reversionary bonus or as a cash bonus at the end of the policy term.

This bonus allocation has become standard practice today, all Life Offices invest the premiums they receive from their policyholders and the profits are distributed among the policyholders in two different ways: A reversionary bonus is added each year based on profits earned and the terminal bonus is added upon maturity date of the policy based on excess profit earned over the whole lifespan of the policy. Once an annual or reversionary bonus has been allocated it cannot be changed and will be guaranteed.

British Life Offices must compete against many other forms of investment and also compete against each other - this leads to very efficient investment departments and small administrations.

British Life Offices invest the premium payments in a safe and profitable way and the policyholders get their share of the profits in form of bonus values. Premiums paid into Endowment Policies are invested in a diversified mix of stocks and shares, real estate, fixed interest securities and cash to achieve strong, stable growth for policy holders.

British Life Offices have proven in the past to produce much higher yields over the long run as compared to other European Insurance companies. Valuation of the results of their investment is not done according to the "Lowest Value Principle" but by using the present and real market value. The market value or actual sales value is much higher as compared to the book value. The increase in the value of properties and real estate is fully granted to policy holders

British Life Offices have had excellent investment results in the past, but it should be realised that past results are no guarantee for future profits. However, most of the term of a policy is over when purchased and the sum of bonus values earned is known and is guaranteed, so that poor results during the last few years of the term of the policy will not change the performance by very much.

Bonus Distribution:
Life Offices distribute these values in two different ways: An annual bonus percentage calculated from the sum assured and starting from the second year onwards also from the accumulated bonusvalue (interest on interest!) is declared every year in writing and is being credited and guaranteed for each policy. A terminal bonus is payable at maturity and is usually a percentage of the sum assured and the accrued bonus values. The respective bonus values reflect market situations and the success of the investment department of the Life Offices

The sum assured and accrued bonus values are paid out in case of early surrendering of the policy.

Credit Ratings of British Life Offices:
British Life Offices are rated by STANDARD & POOR`s, many of them have a Triple AAA rating or a Double AA rating - these ratings reflect the financial strength, reliability and excellent investment performance of the respective Life Office.

Should a British Life Office ever be in danger of bankruptcy, then a special fond guided by "THE POLICYHOLDERS PROTECTION ACT 1974" will pay a minimum of 90% of all receivables from a policy to the investor. Since there was never a bankruptcy during the long history of British Life Offices this fond has never been used.

The PRUDENTIAL, the largest British Life Office, has more than 40 billion £ in administered assets for life policies and even smaller Life Offices like General Accident have investment portfolio's of more than 6 billion pounds for life policies under management. (Ref.: Standard & Poor's UK Life Financial Strength Digest, 1997 Edition).

Most Life Offices regularly pay out more than 90 % of profits to their policy holders as result of small and efficient management and administration.

Returns of British Life Offices:
Table below lists the average actual payoffs taken from 49 British Life Offices during February 1997.
Term

10 Years

15 Years

20 Years

25 Years
Maturity Value

9.784,00 £

22.744.00 £

49.237,00 £

96.767,00 £
annual return

9,2 %

11,0 %

11,9 %

12,2 %

Maturity Value:
The term of a policy ends with the maturity date and the maturity value will be paid out. A policy is also ended when the life assured dies before the maturity date is reached. Maturity value consists of the sum assured, all bonus values accumulated over the years and the terminal bonus. If termination occurs before the maturity date, all bonus values, the sum assured and a terminal bonus in proportion of the time elapsed will add up to maturity value. Maturity values are not guaranteed, should bonus values go up maturity values will be higher, if bonus rates go down so does the maturity value.

A "Bonus Sensitivity Table" will indicate these possible variations. Tables below list the expected results of Maturity Value and yield - at 100% values given will result when no change in bonus value up or down takes place during the remaining years. This example demonstrates that a reduction of 25% in both bonus values ( value lower right hand corner in table) will lower maturity value from £ 24.340,00 to £ 20.875,00, representing a drop of only 14,2 % because when purchasing a policy already a high guaranteed value exists. An increase in both bonus values by 25 % (left upper corner) would raise maturity value from £ 24.340,00 up to £ 28.025,00. Both scenarios are unlikely to happen, the true maturity value will probably be close to the 100% value.

Maturity Value in GBP


125%

120%

110%

100%

90%

80%

75%


125%

28.025

27.826

27.433

27.044

26.661

26.281

26.093



Terminalbonus

(in % of present value)

120%

27.464

27.270

26.884

26.503

26.127

25.756

25.572

110%

26.343

26.157

25.787

25.422

25.061

24.704

24.528

100%

25.222

25.044

24.690

24.340

23.994

23.653

23.484

90%

24.101

23.931

23.592

23.258

22.928

22.602

22.440

80%

22.980

22.818

22.495

22.176

21.862

21.551

21.397

75%

22.420

22.261

21.946

21.636

21.328

21.025

20.875

reversionary bonus (in % of present value)



Annual return in % p.a.


125%

120%

110%

100%

90%

80%

75%


125%

14,37%

14,23%

13,94%

13,65%

13,37%

13,08%

12,94%



Terminalbonus (in % of present value)



120%

13,96%

13,82%

13,53%

13,25%

12,96%

12,68%

12,53%

110%

13,13%

12,98%

12,70%

12,42%

12,13%

11,85%

11,70%

100%

12,26%

12,12%

11,83%

11,55%

11,27%

10,99%

10,84%

90%

11,36%

11,22%

10,93%

10,65%

10,37%

10,09%

9,95%

80%

10,42%

10,28%

10,00%

9,72%

9,44%

9,16%

9,02%

75%

9,93%

9,79%

9,52%

9,24%

8,96%

8,68%

8,54%

reversionary bonus (in % of present value)

The Market of British Endowment Policies
The secondary market.

Two thirds of all Endowment Policies in Britain do not reach maturity with the first owner.

During 1996 a total volume of 900 Million £ worth of life insurance policies was cancelled. From that total of only £ 250 Million found its way into the secondary market.

Reasons for disposal of policies:

*
* 32 % : change of mortgage 20 % : value of policy sufficient to pay off mortgage or loan
* 17 % : divorce
* 15 % : to clear debts
* 12 % : money for own Business
* 04 % : policy no needed any more

To surrender a policy prior to maturity not recommendable, because the value offered by Life Offices as "Surrender Value" is low and does not reflect the real value of the policy. Life Offices are invested firmly for the term of the policy and are therefore not interested in early surrender - that is the reason for the low "Surrender Values" offered.

Long-term investment brings higher returns and is therefor more desirable for Life Offices. If a Life Office would offer high "Surrender Values" it would mean more short term investments which would not produce good investment returns.

The policyholder is therefor well advised to offer his policy to the secondary market where he will get a higher price as compared to the "Surrender Value" offered by the Life Office. Geld*Leben International is offering Traded Endowment Policies for sale whose minimum term is 10 years and the guaranteed value consisting of the sum assured and all bonus values is known at the time of purchase. These guaranteed values will be paid out when premiums are paid up to maturity date. The Investor is therefor buying a policy with an already guaranteed value at the time of purchase.

Transfer of ownership of a Traded Endowment Policy :
Actually no sale or purchase takes place - the Investor receives and buys the absolute rights and obligations to a Traded Endowment Policy and has to pay premiums for the remaining term of the policy. This transfer of right and obligations is done via a "Deed of Absolute Assignment", signed at a solicitors office in Great Britain. This deed is then presented to the Life Office for written acknowledgement of the new owner ("Absolute Assignee"). The new "Absolute Assignee" pays the outstanding premiums to the end of the term of the Traded Endowment Policies and upon maturity receives the total Maturity Value.

If the new Investor wants to sell his Traded Endowment Policies to another Investor, a new deed is made up and the Life Office is informed accordingly.

Who can buy a policy?
There are no restrictions concerning the nationality, age and/or health of the person or persons about to purchase a Traded Endowment Policy. Inquiries from all EU countries and from all other countries world-wide in any currency are welcome. We will always strictly adhere to the "British Money Laundering Regulations of 1993" when firmly accepting orders.

Taxation:
Profits from British Traded Endowment Policies are not falling under the income tax and capital gains tax in Austria, provided the term is 10 years or more and regular premium payments at least once a year take place. The term of a Traded Endowment Policies is calculated from the original take out date of the policy by the first owner. 

Geld*Leben International is not a tax advisor and cannot give authorised taxation information. The Investor is therefor kindly asked to clear his relevant tax position with an appropriate tax advisor in his country.

No Age and Health Checks required:
The life of the original Investor remains insured - the second hand Investors age or health is of no consequence. No questions of age and health are asked to when purchasing a Traded Endowment Policies.

Death of the Life Assured:
Death of the original owner terminates the Traded Endowment Policy and the policy is paid up. The payoff consists of the sum assured, all accrued bonus values and a terminal bonus equivalent to a terminal bonus of a endowment policy of similar length.

Death of the Investor:
If the owner of a Traded Endowment Policy dies the policy will go into his estate and regular inheritance procedures will start. The beneficiaries of the estate will become the absolute assignees and can handle their inheritance as they wish: to pay premiums to maturity and get the full maturity value or sell the policies on the market. If Traded Endowment Policies have been purchased by two or more persons under the term "Beneficial Joint Tenancy", then the part of the diseased person will be transferred to the survivors.

Single Investment
A policy with a guaranteed value and a fixed pay-out date.

The Basics:
The Investor decides the amount he wants to invest and we arrange the purchase. In this way great flexibility for the Investor is assured.

We advise the Investor in detail as to the possibilities: Maturity years up to 2016 can be chosen and there is virtually no limit as to the amount which can be invested. Since maturity value and year of maturity can be determined, it is easy to establish a finance plan suitable to personal needs: to receive payment when children start college, or when they finish school, for the 18. or 21. birthday of children or grand children, to have extra cash at retirement date or for any important personal situation in future which requires extra cash money.

The Organisation:
There are two options available to the Investor:

a) Complete organisation: Purchase of policies, administration and payment of all premiums, collection of maturity value, transfer to the Investor is carried out by us. The Investor also receives an annual valuation of his Traded Endowment Policies.

b) Organisation of the purchase of Traded Endowment Policies by us, but the payment of all premiums and the collection of maturity values is carried out by the Investor directly.

The actual maturity value of any policy will depend on the profits earned by the issuing Life Office and its distribution stategy at the time of maturity. Past performance is not neccessarily a guide for future profits, bonus rates can go up or down.

The Never-Ending Pension
Policies can be bundled to get a "Never-ending" monthly pension.

The "Never Ending Pension" is an investment based on Traded Endowment Policies resulting in regular monthly payments starting either five, ten or fifteen years after purchase. Such an investment is of course also of interest to younger persons, who do not think of a pension, for them we call it a regular secondary income. The "Never Ending Pension" is not dependent on age or health of the Investor and payments will not stop should the Investor die. Proceed will simply become part of the estate and Traded Endowment Policies will belong to the inheritors. It should be noted that the invested capital will not be used up and can be retrieved at any time in later years.

The Basics:
A "Never Ending Pension" results when an Investor buys five Traded Endowment Policies with similar maturity value but different maturity year - the first policy matures in five years, the next in six, then seven, eight and nine years. Normally all five Traded Endowment Policies are purchased at the same time, but they can also be purchased individually step by step during five years.

In five years, when the first of the five policies matures, a new Traded Endowment Policies with similar characteristic to the one just finished is purchased by using part of the maturity pay out. The same is being done during every following year - one keeps always five valid Traded Endowment Policies with similar maturity value for the next five years.

The difference between the maturity value and the purchase price for the new Traded Endowment Policies provides the "Never Ending Pension". The amount of the "Never Ending Pension" is directly related to the bonus rates of the Life Offices - the amount can be higher or lower as predicted. Since most of the accrued bonus values of a policy have already been earned at the time of purchase and are guaranteed to be paid out, no dramatic changes can be expected until maturity date.

Variations:
This continuous process can be interrupted by the Investor at any time: no new Traded Endowment Policies are purchased for five years. The regular pension is paid out as usual up to the end of the five year period - and the amount which normally would be used for the purchase of a new Traded Endowment Policies will accumulate during each of the remaining five years. If this amount is kept with interest until the end of the five year period then the initial capital invested plus a substantial interest is paid back to the Investor. The invested capital is therefor never lost but can be recovered at any time in later years.

If the Investor does not want to start the regular payoff five years from now, the full maturity value for each year will be used to buy new Traded Endowment Policies. The "Never Ending Pension" will begin after 10 years and is aproximately 50 % higher as compared to the 5-year plan. The invested capital will be increased by the purchase of bigger policies and the capital which can be retrieved after five years from the start of payout will be much higher as compared to the original sum invested. The same procedure can be applied to create a "Never Ending Pension" after 15 years from now.

Many more variations are possible to suit customers demand, please call on us for details!

Organisation:
A solid investment needs a solid organisation: the Investor signs a trustee contract with an registered lawyer (trustee) in Vienna to purchase the required Traded Endowment Policies to fit the offered programme of a "Never Ending Pension". The trustee, acting on behalf of the Investor, will open a trustee account with a bank in Vienna in the name of the Investor and the Investor transfers the agreed sum which consists of the purchase price of policies, all premiums up to maturity the commission to his account. Any convertible currency equivalent to the sum in US $ or Pound Sterling offered will be acceptable. We will not take cash payments because of British Money Laundering Regulations.

The trustee then arranges through a solicitor in Great Britain the transfer of ownership of the Traded Endowment Policies to the Investor. When all legal dealings are completed and the British Solicitor has all original documents in hand he will transfer the purchase price.

Original documents are sent to Vienna, the Investor gets a copy and the originals are kept by the trustee in a banksafe.

The trustee changes premium payments from monthly to annual and takes care of timely premium payment transfer to the Life Office. Upon maturity of the first policy the trustee arranges transfer of the Maturity Value to the Investors account and informs the Investor of the payout.

A part of the maturity value received will be used to buy a Traded Endowment Policies with similar maturity value and the maturity date in five years. Again a commission is payable after completion of the deal, included in the commission is the handling through the Austrian and British solicitor and the organisation via Geld*Leben International. The difference between maturity value received in any given year and the purchase price of a new Traded Endowment Policies will be paid out as the "Never Ending Pension"

This procedure is repeated on a yearly basis and in such a way the "Never Ending Pension" is created for the Investor.

How to recover the invested capital:
The capital invested will not be consumed but remains available to the Investor. The whole invested capital can be recovered as follows:

The trustee will be advised by the Investor NOT to purchase new Traded Endowment Policies policy on an annual basis - the amount normally used for that purchase will be deposited to the account - and within five years these deposits with earned interest accumulate to a sum much higher compared to the original sum invested. During all these last five years the regular amount for the "Never Ending Pension" is of course paid out.

Explanation of abbrevations:
Maturity: This is the maturity day of the policy, on this day the maturity value is paid to the Investor
Life Office: The name of the British Insurance Company
Price: The purchase price of the policy
Premiums: The total amount of premiums up to maturity date
g. value: The guaranteed value of a policy; the total of the sum assured plus all accrued bonus values
Total costs: The total costs for a policy; purchase price plus all premiums up to maturity
Mat.value: The amount paid out by the life office at maturity date

How to recover the invested capital:
The capital invested will not be consumed but remains available to the Investor. The whole invested capital can be recovered as follows: The trustee will be advised by the Investor NOT to purchase new Traded Endowment Policies policy on an annual basis - the amount normally used for that purchase will be deposited to the account - and within five years these deposits with earned interest accumulate to a sum much higher as compared to the original sum invested. During all these last five years the regular amount for the "Never Ending Pension" is of course paid out.

The actual maturity value of any policy will depend on the profits earned by the issuing Life Office and ist distribution stategy at the time of maturity. Past performance is not neccessarily a guide for future profits, bonus rates can go up or down.