Traded endowment policies are generally considered a lower-volatility option for individuals seeking capital preservation, defined timelines and more predictable financial outcomes.
If you are considering buying second hand endowment policies, it is important to understand what you are taking over, who issued the original policy, how ownership is transferred, which benefits are guaranteed and whether any premiums remain payable.
For Singaporeans who prefer less exposure to daily market movements, a carefully selected traded endowment policy can provide an alternative to more market-driven assets. Suitability ultimately depends on your financial objectives, liquidity needs and preferred tenure.
What Are Second-Hand Endowment Policies?
Second-hand endowment policies are existing endowment insurance policies that the original policy owner chooses to sell before maturity.
Instead of surrendering the policy directly to the insurer, the owner can sell it through the secondary market. The existing policy can then be made available for takeover by another buyer.
They are commonly described as:
- Traded endowment policies (TEPs)
- Second-hand endowments
- Resale endowment plans
- Resale endowment policies
MoneySense, Singapore’s national financial education programme, similarly describes a traded endowment policy as an endowment policy sold by its original policy owner to another party rather than the insurer. It also notes that traded endowment and traded life policies are commonly referred to as second-hand policies.
No new insurance policy is created. The existing policy continues under its original contractual terms. TES sources existing endowment and life insurance policies from policyholders who no longer wish to continue holding them. After checking that the policy is suitable for takeover and free from encumbrance, it can be made available to a new buyer.
What Happens When You Buy a Traded Endowment Policy?
When you buy over a traded endowment policy, ownership of the existing policy is transferred to you.
The typical process is straightforward:
Once the transfer is completed, the buyer becomes the new legal policy owner and beneficiary, subject to the insurer’s requirements and policy terms.
Unlike starting a new long-term endowment policy from year one, a resale endowment plan already has an established history, accumulated value and remaining tenure. This allows the buyer to assess the policy before deciding whether it fits a particular financial objective.
What Are the Main Risks of Traded Endowment Policies?
Lower market volatility does not mean that every traded endowment policy is identical. Four areas should be considered when selecting a policy.
Insurer Credit Risk
The contractual benefits ultimately depend on the insurance company that issued the policy.
For this reason, the financial standing and track record of the issuing insurer matter. TES focuses on policies issued by established insurers and evaluates the underlying policies before making them available for takeover.
Liquidity Risk
Traded endowment policies are generally suited to being held over their remaining tenure.
If you expect to need the capital at short notice, the policy's maturity date should be considered carefully. Someone planning for a university expense in four years, for example, can select a policy that matures around that financial milestone.
The objective is to match the tenure with when you expect to need the money.
Non-Guaranteed Bonuses
Participating endowment policies can contain both guaranteed and non-guaranteed benefits.
Guaranteed benefits are defined under the policy contract. Future non-guaranteed bonuses can depend on the performance of the insurer's participating fund and future bonus declarations.
When comparing policies, distinguish between guaranteed maturity benefits, vested bonuses and projected future benefits.
Remaining Premium Obligations
Some traded endowment policies have no premiums left to pay. Others require additional payments after takeover.
Before purchasing, consider the complete capital commitment:
- Takeover price
- Remaining premiums
- Number of payments remaining
- Guaranteed maturity value
- Projected maturity value
- Remaining tenure
This gives a clearer view of the policy and its expected outcome than looking at the takeover price alone.
Are Traded Endowment Policies Regulated by MAS?
The secondary-market sale, purchase and distribution of traded endowment policies are not regulated by the Monetary Authority of Singapore (MAS).
However, the underlying endowment policy can be issued and administered by a life insurer regulated by MAS.
The distinction is therefore important:
- Issuing insurer: can be MAS-regulated.
- Underlying endowment policy: remains an insurance contract issued by the insurer.
- Secondary-market transaction: is not regulated by MAS.
- TEP intermediary: is not regulated or licensed by MAS merely for distributing TEPs.
The contractual benefits remain tied to the underlying insurance policy and issuing insurer after a valid transfer of ownership.
What Protects the Value of a Traded Endowment Policy?
Several factors support the structure of a properly selected traded endowment policy.
The Existing Insurance Contract
A traded endowment remains an existing insurance policy. Transferring ownership does not create a new product, and the insurer continues to administer the policy according to its contractual terms.
Legal Transfer of Ownership
TES uses an absolute assignment process to transfer ownership of the policy. Once completed, the new owner takes over the applicable rights, benefits and liabilities under the policy.
Established Insurance Issuers
The quality of the issuing insurer is important because the policy benefits ultimately depend on that insurer meeting its contractual obligations.
Policy Owners' Protection Scheme
Eligible endowment policies issued by PPF Scheme members can receive protection under Singapore's Policy Owners' Protection Scheme.
The Singapore Deposit Insurance Corporation states that the PPF Scheme protects guaranteed benefits of covered life insurance policies, subject to applicable caps. Individual and group endowment policies are included among the types of life policies covered.
This provides an additional protection framework for eligible guaranteed benefits while still making it important to understand the specific policy being purchased.
How to Check a Second-Hand Endowment Policy Before Buying
When buying second hand endowment policies, focus on the fundamentals rather than the headline projected return alone.
Check the insurance company details
Review the policy details and benefits
Check for encumbrances
Calculate remaining premiums
Match the tenure to your objective
Confirm the transfer process
TES's Traded Endowment List allows buyers to compare available policies across different insurers, tenures and projected outcomes before choosing a plan.
Are Traded Endowment Policies Safer Than Stocks, Bonds or Fixed Deposits?
There is no single financial product that is safest in every respect. Each has a different structure.
Compared with stocks, traded endowment policies are generally less exposed to daily market-price volatility because they are not continuously traded on an exchange. SGX notes that stock prices can fall because of macroeconomic, sector-specific or company-specific factors.
Compared with Singapore Savings Bonds, the structures differ. Singapore Savings Bonds are government-backed, while traded endowment benefits depend on the contractual obligations of the life insurer that issued the policy.
Compared with fixed deposits, both can play a capital-preservation role, although their protection structures and tenures differ. Eligible Singapore-dollar deposits are protected under the Deposit Insurance Scheme up to the applicable limits, while eligible life policies fall under the separate PPF Scheme.
For those seeking lower market volatility, defined maturity timelines and more predictable financial outcomes, traded endowments can provide another option within a diversified portfolio.
Who Should Consider Buying Second-Hand Endowment Policies?
Buying second hand endowment policies can be suitable for those who value capital preservation, predictable financial outcomes and clearly defined timelines.
They can be particularly relevant for:
Conservative investors
Those who prefer less exposure to day-to-day equity or REIT price movements.
Retirement planners
A suitable maturity date can align a future payout with retirement milestones.
Parents planning for education
A policy can be selected to mature around anticipated university expenses.
Those with maturing fixed deposits or excess cash
Capital that is not required immediately can be compared with resale endowment plans of different tenures.
Those seeking portfolio diversification
A traded endowment provides exposure to an insurance-based contractual asset rather than another exchange-traded security.
The best policy is therefore not necessarily the one showing the highest projected return. A better fit is one with an established insurer, clear documentation, manageable premium obligations and a maturity date aligned with your financial objective.
Frequently Asked Questions about buying second hand endowment policies
Yes. Existing life and endowment policies can be transferred from one policy owner to another through the appropriate assignment process, subject to the insurer's requirements and policy terms.
A traded endowment can contain both guaranteed and non-guaranteed benefits. Review the policy documentation to understand how each component contributes to the projected maturity value.
The secondary-market sale, purchase and distribution of traded life and traded endowment policies are not regulated by MAS. The underlying insurance policy, however, can be issued by a MAS-regulated life insurer.
Eligible endowment policies issued by PPF Scheme members are covered under the framework for eligible guaranteed benefits, subject to applicable limits.
It depends on the policy. Some resale endowment plans have completed their premium-payment period, while others still require premiums after takeover.
Review the issuing insurer, clean policy ownership, takeover price, guaranteed and non-guaranteed benefits, remaining premiums, maturity date and remaining tenure.
TES specialises in traded endowment policies in Singapore and provides access to existing endowment and life insurance policies available for takeover.
View the TES Traded Endowment List to compare available resale endowment plans, remaining tenures and projected outcomes before deciding whether a traded endowment fits your financial plan.
The traded endowment policy is transferred to you through the required assignment process. Once the insurer records the transfer, you become the new policy owner. You then meet any remaining premium obligations and receive the policy benefits according to its contractual terms.
TES specialises in the Singapore traded endowment market and provides access to carefully selected policies from established insurers. Buyers can review the policy, remaining tenure, premium obligations and projected outcomes before proceeding, while TES coordinates the transaction and ownership-transfer process.
Find a Traded Endowment That Fits Your Financial Timeline
Traded endowments are not about chasing the highest possible return.
They are designed for people who value predictable outcomes, lower market volatility and clearly defined financial timelines. For buyers comparing an endowment plan in Singapore, traded endowments provide another option to consider where an existing policy's remaining tenure and capital commitment match their objectives.
TES maintains one of Singapore's most comprehensive lists of carefully selected traded endowment policies and resale insurance policies, with different maturity periods and projected compounded returns of up to 5% p.a. on available policies.
View the latest TES List and choose a policy that matches when you need your money.
