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How ‘insurance/offshore bonds’ are used to earn high commissions and what is your best alternative?


Insurers that have provided these insurance/offshore bonds and long term savings plans include some major firms in the Isle of Man, Guernsey, Dublin, Cayman Islands, Mauritius etc. These insurers pay the financial salesmen commissions. The commissions come straight out of clients' (= your!) money. This echoes the once-widespread system of remunerating salesmen in the UK, Europe and Australia, now completely outlawed.

In one example, which industry insiders describe as a "typical" case, an insurance giant paid upfront commission of 7% to a salesman 'selling' the offshore bond. That insurance company estimated that the customer, having made an initial investment of $100,000, would pay charges and commissions of $45,600 - equivalent to almost half his initial investment - over a 10-year period. If the customer needed access to the money after a year, he would face a $12,800 penalty.

Charges and commissions on "regular premium" long term savings plans - where savers put away a set amount each month - can be even more damaging for savers, as they carry heavy penalties for people who want access to their money before a stipulated date. In one example, one customer who had saved $350 a month into an offshore savings plan with a 30-year term wanted access to his money after five and a half years. Despite the policy being worth $5,900, he was told the "surrender value" was just $50.92, with the rest being swallowed by charges.

While offshore bonds are a commonly used "wrapper", other types of investment, including pensions such as QROPS and SIPP can also trigger substantial upfront commissions for the salesmen. We have seen documents showing that 'the biggest financial advisor in the world' sold a British man living in Thailand a pension through an insurance giant for which set-up charges came in at £45,554 - or 12% of his £378,675 fund.

While insurance bonds are often cruelly expensive wrappers, the actual investments held within them can also prove disastrous. Many are unregulated funds targeting returns from high-risk assets such as exotic property, wine, timber or other assets. In Europe, unregulated funds are allowed to be marketed only to "high net worth" and "sophisticated" investors, but these restrictions don't apply overseas. According to research, around 75% of unregulated investments result in losses for private investors. When a fund is not regulated, it means that savers have no path to redress if they are mis-sold or something goes wrong with the fund. Because of the illiquid nature of the underlying investments, something often does go wrong. Millions of investors' money is sitting in unregulated funds that have now been suspended, freezing savers' cash until the fund is unwound and its assets sold!

Alternative Investments & Strategies

  • You are probably unaware that it is possible to transfer, without charges, a percentage of the funds you have built up in your existing insurance/offshore bond and/or long term savings plans, to a totally transparent and low cost investment platform ($200 annual membership fee and 0.5% annual management charge with no entry/exit charges).
  • This can be achieved without affecting the benefits accrued and protecting future bonuses.
  • These alternative investments include a range of funds that are not available within your existing insurance/offshore bond and/or long term savings plans.
  • Our preferred funds provide fixed income and/or highly predictable returns of between 8-11% per annum with varying levels of liquidity.
  • None of our current range of funds have any initial charges and therefore this is a highly cost efficient exercise.

We specialise in helping people in this predicament

  • We will review your contract(s) and offer a free appraisal of the contract(s) in question.
  • On the basis that you appoints us as your advisor in respect of your contract(s), we will provide specific investment advice on the life companies existing funds range.
  • We will provide you specific information on withdrawing penalty free funds that can be applied to alternative investments or other wealth creation strategies.
  • We undertake appropriate due diligence to ensure all of our suggested funds meet your risk/reward criteria.
  • We recommend funds that offer capital protection that are uncorrelated with the global equity markets.

To unlock your insurance/offshore bond and/or long term savings plans which are seriously under-performing in value, contact us - hello@expatbeleggen.com - for our full range of solutions.