UK traded endowment policy (TEP) market specialist SL Investment Management has teamed up with Close Brothers to launch an endowment loans product.
The new product provides financial advisers and their clients with increased flexibility and a third option to selling or surrendering unwanted endowment policies.
SL is providing Close Brothers with a full range of administrative services and the expertise and experience from its knowledge of the TEPs market place through its consumer-facing arm, Surrenda-link, which has been trading endowment policies since 1990.
Close Brothers will offer secured loans against endowment policies across the endowment market.
Paul Sands, SL’s chief executive officer, says: “We believe there will be significant demand for this innovative product. It represents another important step in SL’s continued expansion and diversification into other product and service areas, which is very positive for the company as well as advisers and their clients.
“SL continues to be underpinned by sound actuarial principles and technical expertise. Our best of breed position in the TEPs market place makes SL the perfect partner for Close Brothers, with whom we are delighted to be working.”
The product offers policy holders a third option to either surrendering back to the life office or selling the policy enabling the policyholder to release cash but retain life cover and benefit from the excess value at maturity when the policy pays off the loan.
No monthly repayments are required during the term and the policy premiums are also paid from the facility with repayment being made by the policy when it matures.
The product provides financial advisers with a solution for clients in need of cash sums but who do not wish to burden themselves with additional monthly payments as with traditional personal loans.
The key benefits to policy holders are:
– They get a cash lump sum immediately and reduce monthly outgoings by ceasing to pay monthly premiums and;
– No monthly loan repayments are required during the term of the loan
– Policyholders also retain the life assurance element of the policy and they maintain an interest in the terminal bonus when the policy matures, receiving any excess once the loan is repaid
The APR of this product is typically 9.9 per cent.
