Your super-friendly unregulated offshore IFA has told you all the great bits about the Generali Vision Plan. BUT did they mention……………
Charges based on an average Â£500pm plan:2% admin fee (industry standard is 1%).Â£30 Policy fee.1.5% investment allocation charge (industry standard 0-0.5%).0.75% charge based on the advisers fund choice, so the fund that the adviser chooses can incur this charge, normally to obtain further commission. Â£7,500 adviser's commission based on Â£500pm over 25yrs (YES, I said 7.5K that wasn't a typo!)So 4.25% in charges and at least Â£7,500K commissions
Initial period:In order to pay for all these charges including the adviser's commission there is an initial period where 100% of YOUR premiums are NOT invested from the start of the plan.Table as follows:On a 5yr plan none of your money is invested for the first 3.6 months.10yr equals 13.2 months.15yr equals 15.6 months.20yr equals 23 months.30yr equals 28 months.So, on a 25 yr plan, if you cancel the policy up to month 23 you will get nothing back (ZILCHO!). Only after this period does you money get invested and therefore, it can take 2yrs before you start to invest any money, up until then EVERY penny you have put into the plan has gone into the pockets of Generali and the IFA. This is why it can take roughly 6-8YRS to break even on this plan (as admitted by Generali). Also admitted by Generali is that most plans are cancelled within 8 years.
Flexibility?All these charges are applied based on the highest premiums you pay. So, if you increase the premiums the charges increase BUT if you decrease the premiums the charges continue to be based on the HIGHEST monthly premium you were payingSo, if you started paying Â£1000pm but you reduced your payments to Â£50pm you would continue to pay fees and charges based on Â£1000 per month. NICE!
Finally the Generali plan performance is solely based on the funds that the salesman puts your money into within the plan. As almost ALL unregulated offshore IFAs dont require the salesemn to have any experience, qualifications or otherwise (have a look at the Devere group recruitment page) picking the correct funds and monitering them is like handing over your wages to a 10yr old with a choclate fetish.
So there you have it, possibly one of the worst insurance backed investments on the market and one that is banned from sale in the UK by the FSA. Wonder why?!
Don't belive me? Generali factsheet.http://www.generali-gi.com/downloads/gi_vision_brochure_final_11.09.pdf