Skip Navigation Links
Invest in traded life insurance policy
22 Nov 2020 (111 views)

Dear Mr Tan,

Lately, I came across a group of financial consultants who claim to be in the business of buying other people's policies at 10% above the surrender values. They then re-sell these products as short-term, high-interest savings plans. According to them, these policies will be re-sold to individuals who can take over and service the remaining premium, and earn higher interest than most banks' savings accounts.

Their business model seems to be quite different from the conventional ones offered by most insurance companies.

About the company:
https://www.policywoke.com/about-us

The details of the products can be found here:
https://www.policywoke.com/buy-traded-endowment-policy

I noticed that the projected rate of return (IRR) is approximately 3.6% to 4.9%, which seems to be rather high for an endowment plan.

Would it be wise to buy the resold policies from this company, in order to get this rate of return?

I have attached a sample projection, taken directly from their website.

REPLY FROM TAN KIN LIAN
You are providing money to buy over the traded life insurance policy.  You have to pay the future premium over the next few years.

You have to be sure about the maturity value. Some life insurance policies have a future value that comprise of non-guaranteed terminal bonus. The bonus for the next few years are also not guaranteed.

You have to make sure that the life insurance policy is assigned absolutely to you, so that you become the owner of the policy. 

Tan Kin Lian

 


Invest in traded life insurance policy
[Back] [Print]


Dear Mr Tan,

Lately, I came across a group of financial consultants who claim to be in the business of buying other people's policies at 10% above the surrender values. They then re-sell these products as short-term, high-interest savings plans. According to them, these policies will be re-sold to individuals who can take over and service the remaining premium, and earn higher interest than most banks' savings accounts.

Their business model seems to be quite different from the conventional ones offered by most insurance companies.

About the company:
https://www.policywoke.com/about-us

The details of the products can be found here:
https://www.policywoke.com/buy-traded-endowment-policy

I noticed that the projected rate of return (IRR) is approximately 3.6% to 4.9%, which seems to be rather high for an endowment plan.

Would it be wise to buy the resold policies from this company, in order to get this rate of return?

I have attached a sample projection, taken directly from their website.

REPLY FROM TAN KIN LIAN
You are providing money to buy over the traded life insurance policy.  You have to pay the future premium over the next few years.

You have to be sure about the maturity value. Some life insurance policies have a future value that comprise of non-guaranteed terminal bonus. The bonus for the next few years are also not guaranteed.

You have to make sure that the life insurance policy is assigned absolutely to you, so that you become the owner of the policy. 

Tan Kin Lian