In this article I will provide an analysis of the Hansard International Universal Personal Portfolio. You may be familiar with Hansard Global if you have an interest in investing or long-term financial planning. We have talked about them and their products before.
Hansard Global is a British corporation offering financial services from the Isle of Man. Its international arm, Hansard International, has been serving its international clientele with its products and services since 1987.
The organization caters to expats in need of financial advice and has offices in Asia, Latin America, the Middle East, and Africa, among other regions.
In this piece, we will analyze the firm, its offerings, mainly its Universal Personal Portfolio plan, and whether or not it is a good investment.
Please keep in mind that the content of this article is strictly for educational reasons. Consult the services of a trusted financial planner or consultant if you want to invest with Hansard Global or see if their products are appropriate for you and your objectives.
We can help you improve your current Hansard investing plan or provide recommendations if you are not completely satisfied with your current plan.
If you want to invest as an expat or high-net-worth individual, you can email me (advice@adamfayed.com) or use these contact options.
What is Hansard International?
Hansard Global, now in business for over 50 years now, was founded in 1970 by American physician Leonard Polonsky under the name Liberty Life Assurance Company.
The company is a specialist in long-term savings, and its primary mission is to facilitate the distribution of savings and investment products for retirement and other long-term goals through financial advisors and other organizations.
As a FTSE-listed company, Hansard Global plc makes information about its financial performance and state available to the general public on its website (hansard.com/investors).
The customer service representatives at Hansard Global are prepared to address any questions that clients may have and are fluent in a number of regional tongues.
Two divisions of the company, Hansard International and Hansard Worldwide, are each in charge of a particular area of operations.
The products that Hansard International Limited (Far East) sells via its network of advisers in East and Southeast Asia are subject to regulation by the Labuan Financial Services Authority (LFSA).
At the same time, the Insurance Commission of the Bahamas (ICB) oversees Hansard Worldwide Limited. For major markets in South America, the Middle East, Africa, and Asia, Hansard Worldwide has a home base in London.
The ICB and the LFSA are both members of the International Association of Insurance Supervisors, which is an organization of insurance supervisors and regulators from over 200 jurisdictions that monitors 97% of the world’s insurance premiums.
Hansard Global went public in 2006 on the London Stock Exchange following a $357 million IPO that netted its founder £99 million.
Hansard International provides its clients with a variety of financial products, including life insurance, pensions, annuities, and retirement plans.
The company’s unit linked insurance products are a cornerstone; these investment policies combine your savings with protection from risks including death, serious illness, and disability.
Due to the complexity of these products, thorough preparation is essential before to purchase.
What is the Hansard International Universal Personal Portfolio?
The Universal Personal Portfolio is a unit-linked insurance policy that covers the policyholder for life and can be funded with a single lump sum payment.
The contributions you make will be invested in a variety of assets provided and administered by Hansard International Limited or by external investment managers, or into a discretionary managed account, with the hope that their value will rise over the course of the contract’s duration.
The value of your contract, after deducting any fees and levies, will depend on how well the assets you choose perform.
Who should invest?
Clients of Universal Personal Portfolio must be 18 or older and have a large volume of money to invest for the medium to long term.
The agreement is tailored to foreign customers. You can invest in a wide variety of foreign markets and currencies without being restricted to those available in your home country.
This allows you greater freedom to tailor your portfolio to your changing financial needs. There is more of a chance of losing money, but you could make a lot more money if you go this route.
There can be up to two contract holders for a Universal Personal Portfolio. Hansard will follow either party’s directions under the contract unless told differently.
There must be at least one life assured in this contract, and there can be up to two. Once your contract has begun, you will not be able to alter these terms.
When the life promised dies, the death benefit becomes payable and the contract comes to an end (or, in the case of joint lives assured, the first death becomes payable in the case of joint-life first-death and the second death becomes payable in the case of joint-life last-survivor).
If the life assured is over the age of 75 (or if either life assured is over the age of 75 for a joint-life first-death contract, or if both lives assured are over the age of 75 for a joint-life last-survivor contract), the standard death benefit sum assured will be reduced to 101% of the surrender value.
Universal Personal Portfolio is a whole-of-life insurance policy, meaning that it will remain in effect for as long as the lives assured are alive or until the policy is canceled.
How do you contribute?
Your initial payment to the contract can be made in the form of a cash deposit into the designated bank account, a transfer of existing assets in specie into the new contract, or a combination of the two.
Additional payments can be made at any time. Depending on which fee schedule you go with, different minimum contributions will be required.
Can you lose money?
You may not obtain back the whole amount of your contributions with Universal Personal Portfolio, and there is no guarantee or capital protection included.
This contract includes investment choices with varying degrees of risk and, consequently, volatility. Their worth may fluctuate greatly from day to day. During a set grace period, you have the right to cancel the contract without incurring any fees, although you could still lose money if its value has decreased.
Before investing, you should carefully consider the potential benefits and drawbacks of your chosen assets, as well as any investor protection laws that may apply.
This contract may be tied to the assets selected by the contract holder, but Hansard makes no representations or warranties regarding those assets.
Furthermore, if the asset you have selected is only available to a specific type of investor or is subject to specific conditions or restrictions, your instruction to invest in this asset will be taken as a representation that you meet these requirements.
Please be aware that the assets held under a Universal Personal Portfolio contract are the property of Insurance Company Hansard International and are therefore categorized as “institutional investor” owned assets.
The Isle of Man Life Assurance (Compensation of Policyholder) Regulations 1991 (‘the scheme’) govern this agreement. In the event of Hansard’s insolvency, the scheme will cover up to 90% of the company’s liabilities to its policyholders.
By availing of the plan, you agree that Hansard may charge you a levy of up to 2% of the value of your contract in accordance with the Terms and Conditions of your contract if the Scheme applies a levy to us in the event that any other life assurance company on the Isle of Man becomes insolvent.
A failed investment is not protected under this. Please see https://www.iomfsa.im/regulated-sectors/life-insurance/policyholder-protection/ for more details on the plan administered by the Isle of Man Financial Services Authority.
What are the potential outcomes, and what are the risks?
First, it is recommended to get a customized risk profile and illustration from your financial advisor. Depending on your comfort level with risk, these will show how contract fees and future growth could affect your bottom line.
- Changes in circumstances: If your financial situation changes, you may need to make a withdrawal from your contract or even cancel it altogether. Contractual constraints may prevent you from accessing funds when you need them and expose you to the possibility of receiving less than you have invested.
- Advisory risks: Based on their examination of your current and projected financial situation and needs, your independent financial advisor has made the recommendation that you invest in Universal Personal Portfolio.
- There is a chance that this product is not right for you if you have not given your independent financial advisor all of the information they need, or if their analysis does not meet your expectations.
- Risk-reward profile: Universal Personal Portfolio exposes you to a higher level of risk in exchange for the possibility of bigger profits. You should expect to receive less than you put in, so prepare yourself mentally.
- Investment risk: This product offers a range of investment possibilities, each with its own set of benefits and potential drawbacks.
The assets you select will determine the level of risk and the potential investment return. You need to study the fund’s material and make sure you understand the dangers involved. Together with your financial planner, you must determine which investments pose the lowest risk for you.
Your exposure to currency risk depends on whether or not the currency of your contract, donations, or assets differs from the currency in which you expect to realize the future benefit from your contract.
When can you cash out, and is there a penalty?
Universal Personal Portfolio is intended as a long-term investment, and early termination may result in additional fees depending on the billing method chosen.
Warning: if you withdraw money or renounce your contract during a charge period, you may get back less than the value of the fund as represented and maybe even less than what you originally put in.
How do you cancel?
There is typically a grace period after the start of a new contract during which you can back out without incurring any fees.
Hansard International will provide you with cancellation instructions together with your new contract materials; you will have 30 days from the date you receive them to make your request. Contact us or your independent financial advisor if you wish to cancel before you get your contract materials.
If you wish to cancel, Hansard will return your initial investment in full unless the value of the assets you purchased has decreased, in which case they will return the current market value of your investment, which may be less than what you originally invested.
There will not be any hidden fees or penalties taken out of your payment, but there will still be the transaction expenses and asset-specific administration fees like entrance and exit fees.
Any subsequent payments you make are subject to the same cancellation policies as of the date of allocation.
How do you do withdrawals?
There may be a fee assessed, which would include the discontinuation fee and the annual management fee for the quarter remaining after the withdrawal is completed, if applicable.
What about full surrender?
The contract’s value, based on the underlying assets, can be surrendered at any time, however doing so may incur a surrender charge.
To calculate the surrender charge, Hansard will add the discontinuance fee to the annual management fee and the service fee for the portion of the quarter prior to the surrender that has already passed.
What are unit linked insurance plans?
Many of Hansard International’s products, like the Universal Personal Portfolio, are different variations of unit linked insurance plans.
You can get insurance and stock market or bond market exposure in one convenient package with a unit linked insurance plan. Unit-linked insurance plans are a common type of retirement plan for expats, and are offered to them at a premium.
Regular premium payments are required of policyholders of these plans. The insurance premiums are invested in stocks, bonds, or a mix of the two in addition to covering the cost of actual coverage.
Different investment vehicles exist, but they all share the feature of holding other investments. Pension plans and individual retirement accounts (IRAs) are two examples of such vehicles.
There are two types of unit-linked policies and funds within this category: unit-linked policies and unit-linked funds.
Unit-linked funds are separate investment funds that are managed independently of the group or parent company that issues the unit-linked policy.
Numerous financial goals can be attained with the help of a unit linked insurance plan, including life insurance, asset building, retirement income generation, and education finance for one’s children and grandkids.
Investors often establish these accounts for the benefit of their descendants. After the policyholder’s death, the beneficiaries would get benefits from the life insurance policy.
A unit-linked insurance plan’s investment options function very similarly to mutual funds in that they pool the capital of multiple investors.
Therefore, the assets of a unit linked insurance plan are managed in order to achieve a specified financial goal. Shares can be purchased in a variety of market-linked plans and funds, or in a single investment strategy.
Unit linked insurance policies typically call for an up-front, large payment from policyholders. After that, they will need to pay a premium once a year, twice a year, or every month.
Premium payments are always distributed proportionally to a specific investment mandate, regardless of the specific product.
Because of this, policyholders who pay their premiums on a consistent basis can build their initial investment more quickly than they would if they had to wait for returns to accumulate.
In addition, “topping up,” or adding substantial lump sums to an existing balance, is an option provided by many plans and can offer more gains.
Protection insurance policies like critical sickness, death in service, and income protection may also be available through these programs, with payouts based on the policyholder’s length of participation.
If you are diagnosed with a serious medical condition like cancer or a heart attack, critical illness insurance will pay out a lump amount to help with medical expenses. In the event of your untimely death while employed (or before retirement), a death benefit may be paid out under your employer’s death insurance policy.
Income protection insurance is a type of insurance that pays out a monthly benefit to employees who are unable to work due to illness or injury and who are still employed by their company.
How do unit linked insurance plans work?
Unit linked insurance plans are a unique combination of insurance and investment, offering policyholders the opportunity to invest their premiums in various financial instruments such as stocks and mutual funds.
When you purchase a ULIP, a portion of your premium goes towards providing you with life insurance coverage, while the remaining amount is invested in different funds based on your risk appetite and investment goals.
ULIPs work by accumulating your premium payments into a fund value, which is then invested in different asset classes.
Policyholders have the option to choose between equity, debt, or balanced funds, depending on their risk tolerance and investment objectives.
The returns generated from these investments are then credited to the policyholder’s account, which can be withdrawn partially or in full, subject to certain conditions.
It’s important to note that ULIPs often come with a lock-in period, which means that you cannot withdraw your funds for a specific timeframe.
This lock-in period can vary from 3 to 5 years, depending on the specific ULIP plan you choose. This feature is designed to encourage long-term investment and discourage premature withdrawals.
Overall, the functioning of ULIPs involves a combination of insurance coverage and investment growth, making it an enticing option for individuals looking to secure their financial future while capitalizing on market opportunities.
However, it’s essential to carefully consider the downsides of ULIPs before making a decision.
What are the drawbacks?
While unit-linked insurance plans may seem attractive, they have several downsides that make them less favorable compared to other investment options. It’s important to be aware of these drawbacks before committing your hard-earned money to a ULIP.
Lack of transparency in unit-linked insurance plans
One of the major drawbacks of ULIPs is the lack of transparency in how your premiums are allocated and invested.
Unlike investing directly in stocks or mutual funds, where you have complete visibility and control over your investments, ULIPs often limit your choices and decision-making power.
The investment choices within ULIPs are typically predetermined by the insurance company, and policyholders may not have the flexibility to customize their investment portfolio according to their preferences.
Additionally, ULIPs may not provide detailed information about the underlying assets in which your funds are invested. The lack of transparency can make it difficult to assess the performance and risk associated with your investments, leaving you in the dark about how your money is being managed.
High fees and charges associated with ULIPs
Another significant disadvantage of ULIPs is the high fees and charges that can erode your investment returns.
ULIPs often come with various fees, including premium allocation charges, policy administration charges, and fund management charges. These charges are deducted from your premium before the remaining amount is invested, reducing the overall value of your investment.
Premium allocation charges, in particular, can be quite substantial, ranging from 2% to 4% of your premium for the initial years.
Additionally, fund management charges can range from 1% to 2% of the fund value annually. These fees can significantly eat into your returns, making ULIPs a less cost-effective investment option compared to other alternatives.
Limited flexibility and liquidity of ULIPs
ULIPs typically have a lock-in period, which restricts your ability to access your funds for a specific timeframe.
Depending on the ULIP policy you select, this commitment time could be anywhere from three to five years. Investment for the long term is encouraged, while withdrawals before the end of the lock-in period are discouraged.
While the lock-in period can be beneficial for individuals with a long-term investment horizon, it can be a disadvantage for those who require liquidity or have short-term financial goals.
If you find yourself in a situation where you need to access your funds before the lock-in period expires, you may face penalties or restrictions on partial withdrawals. This lack of flexibility and liquidity can limit your financial freedom and make ULIPs a less suitable option for individuals with changing financial needs.
Overall, the lack of transparency, high fees, and limited flexibility and liquidity of ULIPs are significant downsides that make them less favorable as investments. It’s crucial to carefully evaluate these factors before making a decision.
How do unit linked insurance plans compare to other investment options?
When it comes to investing your hard-earned money, it’s important to consider all available options and choose the one that aligns with your financial goals and risk tolerance.
While ULIPs may have their advantages, it’s essential to compare them to other investment options to make an informed decision.
Investing directly in stocks
Direct stock investment provides you with maximum freedom and control. When you invest directly in the stock market, you can pick specific stocks based on your own due diligence.
This flexibility in management gives you the power to tailor your portfolio to your personal risk tolerance and financial goals.
Stocks offer the chance to profit from the expansion of specific businesses, making them a potentially more lucrative investment option than ULIPs.
However, it is essential to remember that stock investment carries its own unique dangers, such as market volatility and the performance of specific companies. Direct stock investments require thorough preparation in the form of study and diversification.
Mutual funds
Mutual funds are pools of capital from various participants that are managed by a professional money manager and used to purchase a wide range of securities.
You can put your money to work for you and benefit from the knowledge of professional fund managers by purchasing shares in a mutual fund.
Mutual funds allow you to diversify your portfolio by selecting individual stocks or bonds based on your risk preferences and long-term financial objectives.
In addition, they promote openness by periodically disclosing information about the funds’ underlying assets and performance. Mutual funds are also quite liquid, so you can purchase or sell units on any trading day.
Mutual funds are more cost-effective than ULIPs since they often have lower fees and charges. However, before investing in a mutual fund, it is essential to conduct a thorough analysis of the fund’s performance, track record, and costs.
Fixed deposits
Investors that prioritize safety of principal and consistent returns often choose fixed deposits. Putting money into a bank or other financial organization for a set period of time at a set interest rate is called a fixed deposit.
Fixed deposits are safer than ULIPs because of the interest they promise to their investors.
However, when compared to investments like equities or mutual funds, the returns on fixed deposits are often smaller. Furthermore, because fixed deposit returns are fixed and predetermined, there is little opportunity for capital appreciation.
Fixed deposits provide stability and security for those who prefer capital preservation and regular income but may not offer the same development potential as ULIPs.
Real estate
If you are wanting to diversify your portfolio, real estate investments can be a good choice. Rental income and possible appreciation over time are two benefits of investing in real estate.
Investing in real estate can provide a hedge against inflation and a reliable source of income. However, real estate investments need a lot of money and have other expenses, such as management and upkeep.
Furthermore, it may be difficult to get at your money quickly if it is invested in real estate.
What alternatives are there to unit linked insurance plans?
If you’ve weighed the pros and cons of unit-linked insurance plans and decided that they are not the right investment option for you, there are several alternatives worth considering.
These alternatives offer different features and benefits that may align better with your financial goals and risk appetite.
Systematic Investment Plans (SIPs)
Systematic Investment Plans (SIPs) are a popular investment option for individuals looking to invest in mutual funds.
SIPs allow you to invest a fixed amount regularly at predetermined intervals, such as monthly or quarterly. This systematic approach helps inculcate disciplined investing habits and allows you to benefit from rupee-cost averaging.
SIPs offer flexibility in terms of investment amount and frequency. They also provide access to a wide range of mutual funds, allowing you to choose funds based on your risk tolerance and investment objectives.
Additionally, SIPs have lower entry barriers, making them accessible to individuals with different investment capacities.
A typical SIP investment may be $100 per month into a mutual fund like ABCDX. Your purchase order would be carried out on the first of every month. This method of investing has two main benefits: it is simple to save money and it allows you to continually buy shares even when the markets are down, which means you can get better pricing on average.
Budgeting for retirement and other financial goals is simplified by establishing a SIP. If you can squeeze even a modest amount into your monthly budget, you will be far more likely to adhere to the plan and eventually reach your investing goals.
It may be easier to set aside $100 per month for retirement savings than it would be to save $1,200 all at once.
Mutual fund share prices can be kept low through systematic, periodic purchases. Opportunities to buy shares at a discount may arise as a result of market swings over time. Many investors employ this method, known as dollar-cost averaging, on the advice of their financial advisors.
Exchange Traded Funds (ETFs)
ETFs, or exchange-traded funds, are mutual funds that trade just like stocks on stock markets. Exchange-traded funds are investments that aim to replicate the value of a market index, industry, or asset group.
They let you spread your risk across a number of different stocks or bonds with just one transaction.
Exchange-traded funds (ETFs) are a source of liquidity because they can be traded throughout the trading day.
Since the underlying assets and performance are constantly reported, they also provide transparency. In addition, exchange-traded funds (ETFs) are cheaper than mutual funds because of their lower expense ratios.
Equities, bonds, commodities, and currencies are just few of the asset groups that can be invested in through ETFs. They give you options and let you tailor your portfolio to your specific needs and risk profile.
By weighing these possibilities, you may find a better fit between your investment preferences, risk appetite, and long-term financial objectives.
What should you consider when investing in plans like the Hansard Universal Personal Portfolio?
Before investing in unit-linked insurance plans like the Hansard International Universal Personal Portfolio, it’s crucial to be aware of the risks and considerations associated with these investment products. Understanding these factors will help you make an informed decision and manage your expectations.
Market risk
ULIPs invest a portion of your premium in various financial instruments such as stocks and mutual funds. As a result, your investment is exposed to market risk. Fluctuations in the market can lead to a decline in the value of your investment, impacting your overall returns.
It’s important to recognize that investments in equity-based ULIPs carry a higher degree of market risk compared to debt-based ULIPs. If you have a low appetite for risk, it’s advisable to opt for debt-based ULIPs or consider other investment options that align better with your risk tolerance.
Insurance coverage vs. investment growth
ULIPs combine insurance coverage with investment growth. While this can be advantageous in certain situations, it’s essential to evaluate whether the insurance coverage offered by ULIPs meets your specific needs.
If your primary objective is to secure life insurance coverage, there may be more cost-effective alternatives available in the market.
Separating insurance coverage from investment growth allows you to choose insurance products based on your coverage requirements and invest in investment vehicles that offer higher returns.
Long-term commitment
ULIPs typically come with a lock-in period, which means that your funds are locked for a specific timeframe. This long-term commitment may not be suitable for individuals with short-term financial goals or those who require liquidity.
Before investing in ULIPs, consider your investment horizon and financial needs. If you anticipate the need for immediate access to your funds, ULIPs may not be the right investment option for you.
Hidden charges
ULIPs often come with various fees and charges, which can significantly impact your investment returns. These charges include premium allocation charges, policy administration charges, and fund management charges.
It’s important to carefully review the fee structure of ULIPs and understand the impact of these charges on your investment.
Additionally, some ULIPs may have surrender charges if you decide to exit the plan before the lock-in period expires. These charges can be substantial and should be taken into account when evaluating the cost-effectiveness of ULIPs.
Performance and track record
When investing in ULIPs, it’s vital to evaluate the performance and track record of the insurance company offering the plan.
Look for insurers with a strong financial standing and a proven track record of delivering consistent returns. This information can be obtained from independent rating agencies or through online research.
ULIPs like the Hansard Universal Personal Porfolio are long-term investment products, and the performance of the underlying funds plays a significant role in determining your returns.
You can learn about the possible returns and risk of your investment by looking at the past performance of the funds offered by the plan.
Final thoughts
The Hansard Universal Personal Portfolio is a unit-linked, whole-life insurance policy. Contributions can be made all at once, and the money can be invested however the investor sees fit.
The money you put into the contract will be invested by Hansard International, third-party investment managers, or at your discretion in a diversified portfolio of assets with the hope that their value will rise over the course of the contract’s duration.
The target market for Universal Personal Portfolio consists of affluent individuals who are at least 18 years old and have a sizable sum of money to invest for the medium to long term.
The contract’s value currency, the default cash account for charging, and the minimum contribution amounts are all tied to the currency in which it is written.
There can be up to two contract holders for a Universal Personal Portfolio. They will follow the instructions of the party holding the more recent contract.
When the life promised dies, the death benefit becomes payable and the contract comes to an end (or, in the case of joint lives assured, the first death becomes payable in the case of joint-life first-death and the second death becomes payable in the case of joint-life last-survivor).
If the life assured is over the age of 75 (or if either life assured is over the age of 75 for a joint-life, first-death contract, or if both lives assured are over the age of 75 for a joint-life, last-survivor contract), the standard death benefit sum assured will be reduced to 101% of the surrender value.
Universal Personal Portfolio is a whole-of-life insurance policy, meaning that it will remain in effect for as long as the lives assured are alive or until the policy is canceled.
As a unit-linked insurance plan, Hansard Universal Personal Portfolio can appear attractive with their combination of insurance coverage and investment growth. However, it’s important to carefully evaluate the drawbacks associated with ULIPs before committing your funds.
In our opinion, Hansard does not have a stellar reputation when it comes to working with licensed intermediaries.
Because of this, there are well-hidden, high product charges used to pay advisers’ commissions that make it likely that the actual benefits you receive will differ significantly from what you expect.
The Universal Personal Portfolio is a fairly rigid instrument that expats and professionals should avail with a skeptical eye. You can have access to better, more competitively priced, versatile, and advantageous investing possibilities out there.
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