Traded Endowment Policies

Dear Mr Tan,

I like to ask about a rare product that not popular in Singapore but was approved by MAS. It is the UK Endowment - Fixed Price Trade Endowment Policy.

This product is sold by a bank in Pound, with a minimum investment of $20k and the shortest tenor is 2 - 3 years to maturity.

I understand that the average return is 6% - 9% p.a. , the only drawback is the currency exchange. What is your view on this product?

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REPLY:

You should ask the financial intermediary (who offers this product to you) to explain the risk. Get them to put it in writing.

The risk depends on the parties involved. You must understand the risk before you make any investment.

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Edited by Tan Kin Lian

Dear Mr Tan

I noticed with interest your mention of TEPs on your blog.

I am a principal of the longest established TEP market maker in the UK. Your enquirer may be interested in the information on our website at www.policyplus.com. We also run a collective investment scheme which is MAS approved.

As you rightly say in your response, it is important for clients to be properly advised. The TEP market is certainly resurgent at present, but we would not want to see people getting into it without understanding what they are getting involved in.

There are a limited number of advisors who genuinely understand this product. If assistance is needed, we will pass on details of some we know.