Scam Alert – Traded Endowment Policies

As more and more people try to take their existing assets and grow their wealth, more scams seem to come to the surface as well. People are usually out to make as much money as they can, and this leaves them open to being taken by deals that are just too good to be true. While traded endowment policies didn’t start out as a scam, they have definitely earned that label as returns fell and money was lost. In this article, we go over the concept of these plans, and why they’re such a bad idea in the first place.

A traded endowment policy is a premium insurance endowment policy. Like other products, they have not only cash value, but a maturity value as well. They are considered “participating”, which means that there are future bonuses. Unfortunately, no one knows what the bonus amount is actually going to be.

Traded Endowment Policies

They were a hot commodity about 8 years ago, because a lot of owners of these policies wanted to sell them off instead of having to turn them into the insurer. In other words, the secondary market allowed people to get a better deal, so that’s where they went.

Here’s where the problem comes in for UK people that felt like they were going to triple their money by investing in these policies: they were often mis-sold. If you’re told that something is safe by someone that you consider to be an authority, wouldn’t you take their word for it? That’s what many UK homeowners did, and it cost them dearly. All they wanted was to try to amplify their retirement savings, but many were left holding the bag. If you got a second mortgage in order to take advantage of this deal, then you basically multiplied your problems further.

This is actually the story of one UK couple that is now facing the loss of their home due to putting all of their eggs in this horrible basket. They were courted for this investment by a non-financial advisory company that pushed this policy, even though there was a chance things would go sour very quickly. There’s nothing safe about these traded endowment policies, and they’re far too complicated for the average investor to really get into, let alone make money from.

If you’re going to try to invest part of your money in order to stretch it forward, you need to get the best financial advice that you can. Unfortunately, many pensioners believe that financial advisers are a waste of their time and they could do a better job themselves. While some advisers aren’t worth it, the majority are professionals that are devoted to protecting you and being your advocate. The key here is to search for an adviser that can advise you on a fixed fee rather than a percentage of what you put down. This encourages them to push you into investment schemes that may not serve your highest interests. Don’t give up the search for a return on your investment, just get smarter about the research that you conduct.