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The acronym "TEPs" stands for "Traded Endowment Policies", which are British with-profit endowments bought and sold in the secondary market
A TEP is created when the holder decides for any number of reasons to relinquish his policy to a third party prior to maturity. This transfer is normally described as the "sale" of the policy.
Upon payment of the sales price, all the rights and obligations contained in the insurance policy are transferred to the policy buyer. The new owner of the policy is responsible for the payment of all future premiums; the insured party remains unchanged. When the policy becomes due, all proceeds (sum assured, declared bonuses and terminal (or final) bonus) are disbursed to the new policyholder.
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The secondary market for British with profit endowment policies differs fundamentally from the secondary market for USA life settlements/risk policies and for German endowment policies.
British endowment policies have a firm maturity date, but the amount to be disbursed upon maturity is not known in advance.
In contrast, USA policies carry an agreed sum assured from their inception. They mature with the death of the insured person; therefore, the due date is unknown. German endowment policies function like British policies (firm maturity date, unknown maturity payment). The difference lies in the inherently more flexible investment policy and rate structure used by British life offices.
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