Family Money: Endowment Policies - Part 2
End Of The Line?
Managing director of Westminster Portfolio Services (Thailand) Ltd.
Last week we started looking at
endowment policies, where the big question now is whether
endowment policies have had their day? One analyst points out
that endowment policies are still a useful way of saving to
secure a child’s education, for instance.
Although maturity values are down on the
heady returns of earlier years, and concerns still exist over
policies due to mature which will probably not meet their
over-ambitious targets over the coming years, they still perform
reasonably over the longer term.
Other commentators are less optimistic. One
sees no place for them going forward. “There’s no point
taking out an endowment…it’s cheaper to buy a unit trust and
get separate life insurance,” he argues.
What about with-profits? The fact that life
companies have moved their with-profits into more fixed-interest
investments is just bolting the stable door after the horse has
gone – they should have been locking in their gains years ago
when equity markets were strong.
Investors working towards a long-term savings
goal – whether a mortgage or their children’s education –
will now do better taking out a straightforward unit-linked
savings plan. But it’s important to understand that there are
no guarantees you’ll meet your target.
Any alternative has to be a function of your
risk tolerance. Mortgage holders who want security should choose
a repayment arrangement – but a sensible medium-risk strategy
for paying off a mortgage is a broad-based international managed
fund, or a mix of funds in a simple offshore insurance wrapper.
But what if you wanted to sell your house
before the endowment policy was fully vested? You’d either
have to carry on paying the endowment premiums to maturity or
cash it in early. The second option could work out very
expensive when taking the inevitably heavy early encashment
penalties into account. Is there an alternative? Yes: it’s
called the second-hand endowment market – also known as
‘Traded Endowment Policies’ or ‘TEPs’ for short.
Essentially, you sell your existing endowment
to a cash-rich company that specialises in buying such policies.
The TEP company buys the policy with a lump sum and then assumes
the responsibility of paying the premiums until it matures.
Along with this responsibility, the purchaser gains all the
bonuses that have been paid out over the years when the policy
was held by the individual whose life is assured at the outset.
The only link the new policy holder has with the old is, were
the original holder (who must remain the assured) to die before
the policy matures, the policy ceases with the pay-out being
made to the new investor whose premium obligation then ceases.
As an investor, you could buy a TEP – which
means purchasing another individual’s life assurance policy.
But no one should buy a TEP on the basis that someone might die:
the policy purchase should be viewed as an investment, not a
There are several reasons why investors are
including TEPs as a fundamental element of an investment
portfolio. First, TEPs can be secured for smallish lump sums and
investors have a range from which to choose. For investment
purposes, a number of favourable givens are known at the outset.
* the overall sum assured;
* the bonuses paid so far;
* the premium sum;
* the date of maturity.
For many investors, one of the largest
carrots that a TEP can dangle is the knowledge that all the
front-end charges been settled because the policy’s term life
has been shortened by the original owner’s premiums.
Another inducement for the purchase is the
knowledge that the policy secures two elements of guarantee: the
sum assured which is the amount the insurance company will pay
out on maturity, and ongoing annual bonuses called
‘reversionary bonuses’. Once a reversionary bonus has been
paid, it is locked into the policy. No matter what the life
company does in the future, a reversionary bonus once declared
cannot be taken away. This payment is made annually, and added
to the value of the policy. That is why it cannot be taken away.
On top of that, there is what is called a ‘terminal bonus’
which may be added on maturity. In some cases this may be worth
a sizeable percentage of the final value of the policy.
Along with reduced charges and locked in
bonuses, there is the opportunity to invest for a known date.
Investors buying a TEP may choose a policy which matures in a
year that suits their forward financial planning.
Two further elements minimise investment risk
in TEPs. The first is that the investments in endowment policies
reflect a wide spread: typically the equity proportion is around
60~70%. Insurance policies are managed in such a way as to
effect a smoother run of performance returns, being balanced
over the years where a certain creaming off from the good years
counteracts the bad.
The second reassurance comes with the fact
that these policies hail from well-respected international
insurance companies. Also bear in mind that what really matters
is the maturity value of the policy. This is the sum which will
enable you to meet your own financial goals. Life companies
declare annual and terminal bonuses once a year, between January
But if you’re confused about where to go to
buy a TEP, there’s an easy solution: invest into a TEP fund.
In recent years, the ‘TEP’ business has
grown enormously and now represents a multi-million pound
industry. There are literally millions of these policies being
traded, and fund management houses specialising in these
policies have been buying them ‘in bulk’.
Investors into TEP funds benefit in several
ways: first, the economy of scale and the significant numbers
involved mean that the volatility (and hence the risk) is
further reduced. Most TEP funds have remarkably stable
performance track records – far more stable than typical
mainstream funds. Perhaps most significantly, TEP funds, because
of the way they operate and the maturity bonuses that are
collected from the policies held, have been able to return
positive performance figures even in years of negative equity
growth, such as the past two-plus years for instance.
So a staid and steady TEP fund may be a
relatively safe haven while investors continue to be nervous
about volatile stock markets.
Personal Directions: Who are you?
By Christina Dodd,
founder and managing director of Asia Training Associates
A lot of what we do and how we behave in our lives is based
on the experiences of our past. Whether they were good or bad, happy or sad
and painful experiences, we carry them around with us and use them as a kind
of springboard in the way we think and act in our lives.
We sometimes don’t realize that this is the case, but it
is so. I have been intrigued by the way human nature tries to hide this fact.
We wear many masks, one could say, to cover the scars we carry with us. Mask
upon mask to shield us from the past and to protect us from similar
experiences that could happen to us in the future. Mask covers mask and
sometimes, for some people, the layers become so thick that it is difficult to
see the real person beneath. Even the person wearing the masks loses
themselves and risks the disappearance of their own identity.
We are very clever at disguise. We are extremely crafty at
times. Inside us can be immense suffering and emotional struggle and yet on
the outside, we appear calm and completely in control. A lot of us live our
lives as if we are a character in a play. It is all theatre.
Carrying emotional wounds around with us and living them
over and over again cannot possibly help us move forward. There is absolutely
no possibility to come out of living in the past and feeling the trauma and
unhappiness of it. What this does to us is exactly what a pool of cement would
do to you if you stepped into it and stood there for a while, thinking that
this is where you should be. You end up getting stuck with no way out and no
way to move. You are unable to move and you are locked into a place that will
hold you forever.
This is where a lot of us live. We live in cement blocks,
twisting and turning and trying to move, but without success. We live in the
past and base our lives on the past. We don’t let go of the past. We can’t
let go maybe because we don’t want to or maybe because we don’t know how
to. Perhaps for some of us it may be too painful. No matter what the reason,
we have to let go! If we don’t, we will always be held back from finding
true happiness and achieving the things we want in life.
Release from the sadness or pain or struggles of the past
can be like breathing oxygen for the first time. Suddenly the chains are gone
and there is a feeling of complete refreshment. You may not forget your past
and indeed it is not necessary to forget it. It is necessary, however, not to
One of the programs that I conduct takes a very close look
at this aspect of release and moving forward. It is not something that can be
lectured about, it takes technique and care. But throughout the years of my
experience in doing this, many people have felt uplifted and have a new lease
on life as a result. The process is highly specialized, and involves working
with a partner who is a complete stranger. In this way, more can be shared and
there is a likelihood of more genuine openness and willingness to share. The
more open people are in this activity, the far greater the results.
This particular activity has been an inspiration for many.
It has opened the door for those who have been locked away for years and who
have been able to finally get on with life and turn towards the present and
future. There is possibility living in the present and moving towards the
future. It is the only way to live a fulfilled life.
Not only is this activity an important one in this program,
but there is also an activity that involves the realization of who you really
are. Who is the real you. Underneath the masks that you wear, who are you
really? This activity gives each individual an opportunity to take a close
look at themselves and to take a look at each individual in their group. It is
the moment where each member makes a positive statement about one
individual’s character and then the individual chooses the statement about
themselves which is to their liking and which is true about themselves. They
then announce who they really are until they are told to stop. This technique
is powerful and emotional as each individual is driven to acknowledge their
Letting go and self-realization are extremely moving parts
of this program. There is a lot to think about and to ponder. There is a lot
to question and to set straight. Both of these activities are highly
inspirational and have opened the way for many to find purpose and meaning in
life. Many a time participants in this program have been overcome with tears
and emotions that have led them to reach out and place more importance on the
way they live life. In this program, which we title “Personal Directions”,
there is usually total involvement and commitment by every participant.
Everyone actually needs to take a look at their lives and
to unlock the past. Everyone needs to take a look at themselves and to
announce their strengths and goals. Everyone needs to understand about human
relations and how the success and happiness of human beings totally depends on
the relationships they develop with other human beings. Everyone needs to
remove the masks they wear and reveal who they really are. Only this way can
we find real meaning and purpose in life.
The program I have described to you in this article is one
that is run over two days. It involves many other activities apart from the
ones explained above. It is interactive and involves time for reflection and
analysis of oneself. Many people in many countries have “found themselves”
through participating in this program and opening their minds to new and
different ways of approaching life.
For more information on this and other programs, please
don’t hesitate to contact me at Christina.dodd @asiatrainingassociates.com
Until next week, have a great time!
The Doctor's Consultation:
Blood Pressure - the silent killer!
by Dr. Iain Corness
Blood Pressure - the silent killer! When you think about
it, that’s a pretty strong thing to say about something that is needed for
life. When patients say to me, “I’ve got a bit of blood pressure,” I
always reply, “I certainly hope so, because if you haven’t got any, then
you are dead.”
You need the pressure to push the blood around your body.
This blood is used to pick up oxygen from the lungs and then take it to the
tissues and all the important organs (you do have more than one important
The blood circulation system consists of your heart which
is the pump, your arteries, which are the vessels taking the oxygenated blood
away from the heart/lungs to the tissues, and the veins which return the blood
back to the heart.
Looking at the pump, the muscular heart muscle squeezes the
blood inside its own chambers and thus propels the blood into the aorta, the
biggest artery in the body. This high burst of pressure is called the Systolic
Now the arteries and veins are totally connected, there’s
no ‘leaks’ in the system to cause pressure drops, and in fact there is a
resting pressure, which is called the Diastolic Pressure. This is why when the
doctor or nurse takes your blood pressure the result is expressed as two
figures, for example 120/80, which means the peak pulse pressure is 120, while
the resting pressure is 80. The unit of measurement is actually millimeters of
mercury, and that figure of 120 just means the pressure is high enough to hold
up a column of mercury 120 mm high. In fact, we still use some ‘mercury’
sphygmomanometers where you can look at the column of mercury used for this BP
So now we know that we have to have BP to live, why can it
be a killer? Well, the arteries are only designed to withstand certain
pressures before there can be a blow-out, just like your car’s tyres blowing
out. High blood pressure (Hypertension) is then a dangerous condition and can
lead to strokes, following an artery “blowing out” with the high pressure.
If this happens in the brain you can die or even be left with a form of
paralysis. Not fun!
Many years of having high BP can also affect the workings
of certain organs, with the kidneys being particularly prone to problems. Even
the heart itself is affected, as the amount of energy required to squeeze the
blood around makes the heart muscle develop (just like all those people who
‘pump iron’ and get those big muscles in their arms). The thicker,
enlarged heart needs an even greater supply of oxygen to keep pumping, making
a really vicious circle.
The problem with Hypertension is that it is not a condition
that you will necessarily know about. When you are on the way to a heart
attack, you get some warning signs, like chest pains. Hypertension is silent -
well, that’s what the good books will tell you, but that is not quite true.
I honestly believe that if you listen to your body, then you will get a
warning to go and get a check-up. But even easier - take this article as the
warning and go and get your check up done today. Do it! And the good news is
that we can control high BP very easily, when we know about it.
This is a fairly delicate problem and one that threatens to upset the
entire family. This is why I am writing to you. My older sister is going
to come over for a couple of weeks in December and I just know it will be
a disaster. First, every time she goes anywhere for “just a couple of
weeks” she is still there one month later. As she is the oldest in the
family, she criticizes everything I do and I also know she will bring men
home, which is not the right thing to do in front of my children. How can
I persuade her not to come?
There are a couple of ways around this problem, Petal. First off, you can
threaten to go away on holidays yourself. After all December is a good
month to visit the rellies. You could always go and stay with her! You can
ask some other friends to come over so there is no room. You can decide to
redecorate and there will be no spare rooms without painters’ tarpaulins
and ladders. Or you could do what you should have done many years ago -
just say, No! You do say that you have children, so it’s not as if you
are 12 years old. She may be the oldest in the family, but it’s time you
just stood your ground. Do something positive. Time you took charge of
I had a small argument with a bar girl the other night - over money, what
else? She told me that she is going to Japan because her boyfriend belongs
to the Yakuza and she will bring him back to “fix” me. After thinking
about it, I wonder if I am in any danger or not. What do you think,
Thai girls are no different from other girls when it comes to dreaming up
a few porky pies to bolster up their case. I doubt very much whether she
has a nine-fingered friend in Japan, and I am also sure that she will not
be jetting off to see him to extract retribution from an unpaid bar
alliance. Think about it and stop being a whimp. In the meantime learn to
I have a very embarrassing problem with body hair. It is thick and curly
and all over my body. I have not been able to go to the beach for years as
people look at me as if I were a gorilla. Do you know if there is some way
I can reduce my woolly blanket to a thickness that is less obvious?
You certainly do have a problem, Petal, but you did not say whether you
are male or female. This makes a difference. Many men have their body hair
removed with either shaving or waxing. Sounds painful to me, but perhaps
not as painful as looking like a gorilla. With ladies, there are tablets
that can be taken, but you would have to see a doctor for this. See your
local medic, or perhaps even the vet if it’s that bad.
I am going gray. I have noticed the small problem now for about a year,
but recently it is becoming a big problem. One of my friends suggested I
use some hair preparation to bring the colour back again. I really do not
want to start looking old before my time, but I am just a little hesitant.
As a woman of the world, Hillary, do you think I should do it?
Dear graying English Gentleman,
Here’s the news and it’s all bad, Petal. The preparation doesn’t
bring the colour back, it just paints the hair. So as the hair grows, you
get that wonderful two tone hair roots. After a few weeks the hair goes
that strange orange colour that you see round town too. Shave the lot off.
On the other hand, perhaps Ling can lend you some.
When sitting in a bar the other evening I overheard a man talking to his
long time Thai girlfriend (of at least several hours) and the thing that
was most noticeable was the way he was shouting at her like a three year
old. Hillary, why do people always think that by speaking loudly and in
“baby talk” the other person will understand better? He was even
referring to his plane trip as going on the “big silver bird” for
example. I am sure even the girls from Esarn know what a plane is. Do you
know why they do this Hillary?
Many people are under the impression that the secret of good communication
is to shout louder, and your man in the pub obviously holds with that
idea. The baby talk is just another misapprehension. You are quite
correct, all the Thai girls would understand “plane” but if he feels
that he is communicating better with the lady by saying “You go with
Papa on silver bird” then so be it. Anyway, what were you doing
eavesdropping? And finally, most of the big birds are white these days.
Camera Class: Tricks with flash
by Harry Flashman
about every camera these days comes with its own built-in flash. Such technical
items as ‘guide numbers’ don’t seem to matter any more. The camera does it
all for you. But there is always a downside to just letting the camera do all
the work. And that is you get what the camera thinks you want - not what you
Take the example where you are shooting indoors at night
(always a good time to use extra lighting), but you still want some of the
background to show up. Shooting people in a pub is a good example. You want more
than just ‘heads’; you want to show just what kind of a place it really was.
To do this is tricky, but there are several ways. You can use
more than one flash (sometimes called ‘slaves’) and they fire when they
detect the flash burst from the primary flash, or you can even link them all up
with flash cables triggered by the shutter on the camera. You set the slaves to
light up the background, while the main flash illuminates the subject. That’s
Option Two is to use a tripod and the time exposure setting
to record the background and then pop the main flash to record the subject in
the foreground. Difficult, but possible.
Option Three is the simplest. Set the camera’s aperture to
around f5.6 and the shutter speed to 1/15th of a second. You can even hand-hold
at this slow shutter speed, as long as you lean on something. The slow shutter
and wide open aperture gives enough light to get the background to show up on
film, and the flash burst is enough to record the subject. Try it. Works!
Of course, to do this you have to take the camera out of Auto
mode and into manual. In fact, if you want to try something, go down to the pub
and shoot the likely lads at 1/8th, 1/15th and a 1/30th and see the differences
you will get. The subject will be OK in each, as the lighting for the foreground
depends only on the flash power, while the background depends on the ambient
light, and the longer the shutter is held open, the more background details you
Another trick you can do with any camera that has a flash, be
that built in or bolted to the top of it, is to throw colour at your subject.
The important item of equipment is coloured cellophane paper (sometimes called
‘gels’ in the industry). Put a blue gel over the flash head and you will get
a very ‘cold’ photograph, especially if you are taking pictures of people.
Conversely, put an orange gel over the flash and you will get a wonderfully warm
person in the foreground.
For an even wilder result, if you can take the flash off the
camera, shoot the subject side lit with a coloured gel over the major flash.
Experiment with blue, red, green, orange, yellow - we are not looking to
reproduce reality here, we (that’s you) are trying to produce an artistic
Most keen amateur photographers will have heard of the term
“Fill-in Flash”. This refers to a reduced output flash burst, used to
lighten shadows in harsh daylight, or to illuminate the front of a back-lit
With many of the modern cameras, fill-in flash is simple,
because the camera is programmed to do this automatically. However, with manual
flash guns, “softly” is the word. You must reduce the output of the flash so
it will gently lighten the shadows and not “blow out” the subject details
like a searchlight. The trick is to either diffuse the flash with tracing paper
or a handkerchief and do not adjust the camera settings, or reduce the flash
power setting by two aperture stops below that indicated by the camera. In other
words, set the camera lens on f11 and the flash on f5.6. Simple! Try some of
these tricks this weekend.
Mrs. DoLittle’s Corner: Never judge a book by its cover
As I was ‘dolittle’ ing’ around Bangkok yesterday,
I noticed how big and handsome and clever the street dogs have become. The
game is called: survival of the fittest. In the city area, most were males
and most had collars, showing some kind of ownership. Eight out of every
ten, in the area around Lumpini Park, had additional red collars with blue
rabies tags showing they had been recently vaccinated. They all looked well
fed and confident. This is a vast improvement since two years ago when I
last had the opportunity to go look at the doggie situation on the streets
in the Big Mango.
I’ve walked so far looking for a home my foot hurts. I’m hungry and I
need a bath. These darn fleas are killing me! Can you help me please?
Of course I also noticed there were fewer dogs
everywhere, which brings to mind the big ‘round-up’ of strays performed
by the authorities prior to the APEC summit. Despite the people’s
argument, the dogs do not belong on the street; they belong in a loving
home. It is unrealistic to assume that they can just be released after the
APEC meeting is over. It will be very traumatic for the dogs. They belong
with people and attach themselves to territory which they defend.
Plus, I do not think the authorities remember where each
dog was caught. Irreversible damage has already been done, and if the dogs
are let loose at random, it would be very frightening for them. They will
try the rest of their lives to return to where they came from. This would be
very stressful for them. There would be problems for them everywhere as the
dogs already living there would drive them away. They would always be on the
run. The weak would not make it; the strong would form packs that could
I’m afraid not much thought has been put into this
idea. Another solution has to be worked out. Like perhaps, all these newly
rounded up dogs should be put on a health and beautification program, later
to be adopted out to all those people who are complaining of government
tactics. If the government is sincere in wanting to help the dogs, they
should set up an adoption center. Anybody who genuinely wants to help can
take home a grateful loyal friend.
A sad end to the day was witnessing an old gray, skinny,
limping dog with an eye infection, partially blind, which was being rejected
from its former home in a shop house. The roller door was being pulled shut
and the poor dog was yelping and howling, trying to get under it. An angry
voice told him to go away. He scratched and whimpered, then sadly lay down
on the street in front of a tiny crack of light from inside. The neighbors
told me the owner no longer wanted to feed him and he will not look for food
anywhere else. Even though his body was in a pitiful condition, I could see
his heart was suffering more.
There is so much ignorance about the animals we have as
pets. We expect them to care for themselves with as little effort as
possible from ourselves. We need to take care of our own responsibilities
before we condemn the government for cleaning up our mess. The dogs do not
create the problems, people who do not sterilize their pets and let their
offspring wander loose are the guilty ones.
In retrospect, we cannot expect our leaders to do
anything else than physically remove the problems they encounter in keeping
the country running smoothly, without any deeper thought gone into any
repercussions. The problem may be momentarily gone, but because the real
cause is lack of animal welfare education, there will soon be just as many
dogs back on the streets.
Pet ownership needs to be controlled and even in some
cases, assisted. People need to understand that dogs have personalities, all
of whom live to find someone to obey. Dogs are so devoted to people service
that even a bad master gets loyalty. As a species, they are unique and
deserve understanding and respect from humans.
The morale of today’s issue is: Never judge a book by