Generali Vision was perhaps the most commonly sold savings plan in the expat market, until a few years ago. But is the plan worth taking out, and what should somebody do who has the plan?
The plan is a regular contribution plan, which can be taken out for as little as 5 years, with 25-30 years also common. In general, the plan should only be taken out if the person intends to contribute for the full term. This is because the charging structure is high. A breakdown of the charges can be found below:
Fees linked to the initial period: 0.3%-2.75% depending on the year of the plan and the term taken out. For example, on a 25 year plan, the charges are 2.75% for the first 5 years, 2% for the next 5 years and 0.3% for the next 15 years.
Fixed monthly fees: £3
Admin charges: 1.5% annually
Bid/offer spread: (the difference between the buying and selling price) – 0%-2%, only if internal funds are chosen is it 0%.
As you can see, the charges are quite high. However, if somebody contributes to the plan for every single month without exception, a bonus will be added to the account. In practice, this means that the plan is expensive (around 4% per year in fees) unless the person contributes every month, in which case the bonuses will reduce the fees to around 1% per year. Loyalty bonuses are only available on plans of at least 10 years. On a plan of over 10 years, a loyalty bonus of 5% of any premiums paid will be levied to the account. After 30 years, somebody saving $500 a month, can `earn` up to $9,000 in bonuses, which essentially is just reducing the fees.
As few people are told about the way the fees and loyalty bonuses work, many customers stop contributing early, therefore not qualifying them for the bonus. So what should somebody do who has this plan? If they have been contributing every month, they should be careful before cancelling or stopping payments. A review should be made, carefully looking at the costs of doing so. If somebody has already stopped payments and therefore cannot qualify for some of the loyalty bonuses, cheaper and more flexible options exist in the market.
Finally, many brokers levy 2 or more additional fees to the account, which can further reduce fees. If somebody wants to keep a plan, it may pay to get a review of the account, and see if a better solution can be found.
If you have a Generally Vision plan and want a review, don’t hesitate to get in touch via adamfayed@iamgltd.com
Considering charges and potential issues with financial products like Generali Vision, exploring the HSBC Expat Review could provide relevant insights.
