Why invest in Singapore traded endowment policies (Steps)?

​How can buying  Singapore traded endowment policies possibly make investment sense? 

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What are Singapore Traded Endowment Policies (Steps)?

Singapore Traded Endowment Policies (Steps) are endowment policies that the original policyholder has sold by absolute assignment of all future benefits. "Traded endowment policy" is merely a fancy way of saying second-hand endowment policy.

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For a variety of reasons, many policyholders do not hold their policies to maturity date. They surrender their policies or sell their endowment policies. The reason traded endowment policies market exists is because surrender values do not always reflect the real value of the policy at that time.

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Policies sold or auctioned are assigned to the investors who purchase them and who then take on the responsibility for the payment of future premiums. When the policy reaches maturity or the life assured dies all the benefits are paid to the investor owning the policy.

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Why should you invest in Singapore traded endowment policies?

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Steps may not sound exciting, but for thinking investors they may be ideal vehicles for building capital to meet future financial needs or obligations at a fixed time in the future.

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They may be used to provide future lump sums tailored to specific needs. Popular uses include catering for children school or university fees and general savings as part of a wider portfolio of investments. Its also suitable to invest in STEPS for your retirement needs. 

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Steps appeal is based on the fact that they are backed by the strength and proven performance of leading life insurance companies (like Great Eastern Life, Prudential, AIA, Aviva etc..) with exposure to a broad range of asset classes. They also offer steady and stable growth prospects.

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Steps ideally suit investors who are looking for a combination of relative safety and security.

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In most circumstances Steps investors can rest safe in the knowledge that they cannot lose any of their initial investment, provided they continue to pay the remaining due premiums and keep the policy in force until its stated maturity date.

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This is because the basic "sum assured" and annual bonuses allocated by the time of purchase are guaranteed - i.e. "locked in" and together are likely to be worth more than the initial purchase price. In addition, the expenses incurred in the early years commission and other costs have been absorbed already by the original policyholder.

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To summarise:

 

a) Investing in Singapore traded endowment policies(Steps) is very safe as long as the investor continue to pay the remaining due premiums and keep the policy in force until its stated maturity date.

 

b) It's a smarter way to save money because the maturity period is shorter with higher interest rate returns compared to what the first policy owner will get. You can get better interest rate returns in shorter time period. For example you can get up to 40% returns in 10 years. Returns is consistent and stable.

 

c) No worries and hassle free. Many investors are happy with their investments.  

 

d) It is a smart way to grow your wealth.

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