British life insurance and the TEP market
A few years ago I did some research for tax reasons, looking for a high-return financial investment which had no tax on accrued interest and did not require me to invest in stocks directly. It quickly became clear that at the turn of the millennium in 2000 there were no alternatives left to pensions and life insurance. I decided to go for British life insurance policies, which invest far more in shares and offer almost no guaranteed minimum interest rate for German customers. I was happy to forego a minimum interest rate as it hampers the potential for returns. Anyone who wants a guarantee for their investment is welcome to pay a fee for it. Voluntarily. As a customer I would be forced to help pay this indirect fee for security and minimum interest. I invested in British life insurance in two different ways. I invested directly in a life insurance policy, and I invested in the so-called "TEP market" for British life insurance. The "TEP market" deals in returned British life insurance policies, and so prevents a direct cancellation of insurance policies. Why should a policy holder who has to cancel their policy for personal reasons have to pay a penalty, when the "TEP market" can take the policy off their hands with almost no loss? The "TEP market" is very liquid in England due to its tradition and acceptance there. The investor receives shares from a pool of returned policies which already have a high to very high buy-back value. My entry into the market was very well timed, as the stock exchanges were going down fast and much spoke against an investment in British life insurance. As I usually invest against the trend in the stock market, I am very satisfied with results of the last six years. The "TEP market" should be particularly interesting in 2006, as Standard Life is going about a demutualisation. If the European Bourses can cope with the coming interest rate increases, nothing should stand in the way of Standard Life's flotation. I shall spare you further details - more information can be found at Standard Life.
