Traded endowment plans are essentially policies that are sold from the original policyholder to a third party. These policies are sold along with the complete assignment of all future benefits. In simple terms, they are second-hand endowment policies. To some, this might be a foreign concept. However, it is actually a common practice because most people do not usually maintain their policy until it reaches its maturity date. The typical maturity date is roughly 25 years after the start of the policy.
Usually, the process starts when the policyholder surrenders their policy to the insurance company. These insurance companies would propose a quote that is significantly lower than what the buyer bought it for. Alternatively, traded endowment policies can be sold by trading them on the open market as a second-hand traded endowment plan. If you are looking into investing in a traded endowment plan in Singapore, then keep reading on so that you would be able to make informed decisions!
Traded endowment plans have a short maturity
Since traded endowment plans are bought from previous policyholders, the main difference from getting this endowment plan would be the short maturity. As a result, they require significantly less commitment and yield more significant total returns. Although this is not the best type of endowment plan for some, it is perfect for others.
In the case that you need to pay for your child’s university education in about five to 10 years, then getting a traded endowment plan with a shorter maturity would be a wise decision.
Transferring of the policy is possible
Although the maturity of the traded endowment plan is much shorter than regular policies, there are instances where people would want to transfer their policy to someone else in their family. One advantage of traded endowment plans is that this is possible.
In order to get your traded endowment plan transferred to one of your family members, you would have to head down to the office of your insurance company. The insurance company will then perform the paperwork and the absolute assignment to effect the next transfer. This process is hassle-free, seamless and swift. However, several criteria will be considered before one is eligible to have the policy transferred over to them. For instance, the individual has to be at least 21 years old. They would have to be of a healthy mental state, not have records of being an undischarged bankrupt and also not entering into the absolute assignment of policy under any form of coercion.
What happens after the policy matures?
This is one of the most frequently asked questions when it comes to getting a traded endowment plan in Singapore. Roughly one month before your policy matures, you would be notified by your insurance company through mail.
The insurance company usually makes the payment through cheque, and it would be mailed directly to the registered address of the policyholder. In some instances, an alternative mode of payment could be arranged with the insurance company.
Conclusion
This should have given you a clearer picture of traded endowment plans and how it works. If you have more queries regarding the various plans, you should reach out to an insurance agency and have your doubts cleared before taking the leap!
