Important Note: Values below are for example only, please click on the link below for a currently available portfolio.

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Geared “With Profit” Portfolios using Traded Endowments

Put very simply “gearing” means borrowing at one rate of interest and re-investing at a higher rate and at the same time allowing the investor to acquire more policies for the same net investment. With base rates currently 4% and borrowings at 5.5% so after selecting a portfolio of policies returning 8% to 10% dependent on date of policy maturity - then it will be obvious how beneficial it can be to utilise gearing.

Several High Street Banks recognising the inbuilt value of traded endowment policies are prepared to advance loans of up to a maximum of 90% of surrender values at 1.5% above base rate secured against a portfolio of traded endowment policies. A typical portfolio illustrated below reflects a mixture of policies issued by a variety of different life offices maturing at differing intervals further smoothing out the peaks and troughs of the classic “with profit” concept and also makes provision for taking advantage of capital gains tax allowances.

Specimen Schedule of Policies

Life Office	Term	FMV	Maturity Date	Basic sum assured	Declared bonus	Gross premium	ADR	Surrender Value	Purchase Price
Prudential	25	£24,705	01/10/03	£4,000	£6,834	£14.30	8.00%	£17,101	£21,088
Norwich Union	22	£25,698	01/08/07	£7,499	£6,216	£70.00	9.00%	£9,600	£12,258
Refuge	25	£26,809	01/03/08	£5,000	£6,425	£20.82	9.00%	£10,600	£14,503
NFU Mutual	25	£11,785	01/02/09	£2,500	£2,338	£10.00	9.25%	£3,800	£5,627
CIS	21	£22,666	01/02/11	£5,300	£2,152	£30.00	9.75%	£3,400	£7,432
							Totals:	£44,501	£60,908

Graph 1 Graph 1 alongside illustrates (blue bar) the anticipated growth of the policies within the portfolio when compared with the borrowings consisting of the initial loan plus the payment of ongoing premiums by the lender on a monthly basis and the roll up of interest on both.

Graph 2 Graph 2 alongside illustrates throughout the life of the fund how the outstanding loan situation including payment of premiums, roll up of interest, and bank charges does not breach banking covenants when related to increasing surrender values after allowing for growth at 8% per annum.

How it works using the specimen schedule of policies

How to Proceed

With the help of your IFA first of all start by constructing your portfolio to meet your personal requirements from the list of policies available on our website waymossonlione.co.uk. Having established availability ask us to process them through our geared policy computer module to check suitability and thereafter we will arrange banking facilities for you and at the same time ask for a net payment to be made to our solicitors who in turn will arrange to draw down the balance of the purchase price from our panel of selected bankers after loan facilities have been completed by the individual borrower.

The traded endowments selected for your portfolio will be assigned to your Lender as security for the loan and will be kept in safe keeping for the duration of the loan.

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