In this piece, we’ll examine all you need to know about the Utmost International Collective Redemption Bond.
Some of you may recognize this product under its previous name, Quilter International Collective Redemption Bond.
If you want to invest as an expat or high-net-worth individual, which is what I specialize in, you can email me (advice@adamfayed.com) or use WhatsApp (+44-7393-450-837).
This includes if you have a policy and aren’t happy
From Quilter to Utmost
Amid insurance and savings provider Utmost Group’s aggressive buildout strategy, the company bought then Quilter International for roughly 481 million pounds in November 2021. After the takeover, Quilter rebranded and became known as Utmost International.
The buyout is just one among the slew of acquisitions that Utmost Group had made from 2015 in the insurance sector. The purchases include the subsidiaries of known firms like Aviva, AXA, and Generali.
Utmost International is a life insurance and investment provider that targets high net worth individuals. Investment bonds, savings plans, and unit-linked insurance are part of the offerings the company provides.
The unit-linked insurance schemes, or unit-linked policies, bring financial protection and investment options together. Premiums for a unit-linked policy are invested in a pool of funds rather than being allocated only to the cost of insurance, giving the policyholder more flexibility in how and where their money is spent. These funds may be invested in different financial instruments, including stocks, bonds, and money market accounts.
The proportion invested goes toward purchasing units in the chosen funds. Each unit’s value fluctuates with the market based on how the fund’s assets have fared.
What is the Utmost International Collective Redemption Bond?
The Utmost International Collective Redemption Bond is a long-term investment solution offered as a capital redemption contract with a fixed term of 99 years. This means that the investment remains in place until the maturity date, unless it is fully withdrawn beforehand.
The account can be set up in US dollars, British pounds, or euros.
Unlike traditional insurance policies, this capital redemption contract does not provide any insurance coverage.
Designed for medium to long-term investment goals, the bond guarantees a minimum value of at least twice the premium amount paid (excluding any withdrawals or surrenders) at the end of the term.
The Isle of Man, a politically stable and tax efficient offshore nation, is where the bond is kept, so the proceeds are shielded from income and capital gains tax. Additionally, it offers estate planning options that allow for the preservation and transfer of wealth to future generations.
It is worth mentioning that the Utmost International Collective Redemption Bond does not permit the holding of highly personalized assets, which is beneficial for UK residents returning from abroad. To continue benefiting from tax-deferred gains, it is crucial to “endorse” the offshore investment bond upon returning to the UK. Failure to endorse the bond could result in the individual being liable to pay income tax on annual deemed gains, regardless of whether the investment bond generated any actual gains.
To guarantee that their assets are kept within the parameters of a product like the Collective Redemption Bond, investors may return to the UK and direct the offshore investment bond provider to endorse the policy.
The bond can be issued as a single policy or as a cluster of policies, offering convenient and tax-efficient access to the invested funds.
When a policy is activated, the commission and charge structure are locked in for the first charging period. A “surrender charge” or “early withdrawal charge” may be imposed if the insurance is cashed in early. Therefore, careful consideration should be given to the investment’s long-term nature and associated charges before making any early withdrawals.
Who are eligible to invest?
Individuals 18 to 89 years old can open a Collective Redemption Bond account.
What are the investment minimums?
The minimum initial lump sum investment required to open an account is 25,000 pounds, or 37,500 euros or USD. The policy allows for unlimited further lump sum payments of the same amount.
These figures can change any time. It would be best to speak with your financial advisor to make sure you have the latest data.
What charges are imposed?
The fees and charges associated with the Utmost International Collective Redemption Bond can vary depending on the type of plan chosen and the commission structure agreed upon with the salesperson or advisor.
It is important to review the charges schedule provided by Utmost International, as it outlines the costs involved in setting up and managing the bond, administrative fees charged by the fund managers, and any fees imposed by your financial advisor.
Early surrender of the policy may result in exit penalties in the form of surrender charges, which are linked to the duration of the policy. These charges are designed to cover the set-up fee and any commission payments made by Utmost International to your financial advisor.
While Utmost has a strong reputation, it is worth noting that different advisers may offer the same product with varying costs, as the flexibility of charging structures allows for customization to suit different adviser preferences.
One-off or regular withdrawals from the bond are generally free of charge, as long as the minimum surrender value is maintained. The minimum surrender value is calculated as the greater of 15,000 USD/EUR/10,000 GBP or 15% of the overall premiums received after deducting applicable charges to sustain the policy.
Double-check the terms and conditions in your policy terms and don’t be afraid to keep questions coming to your advisor.
What funds are accessible?
Utmost International provides several investment opportunities to meet the varying requirements and interests of potential clients. These options include both the firm’s own collective investment funds and unit trusts, as well as external funds sourced from reputable investment providers.
In addition to investment funds and unit trusts, Utmost also provides access to Eurobonds and currency deposits. Eurobonds are debt instruments issued in a foreign currency. They offer exposure to international fixed-income markets.
Currency deposits, on the other hand, allow investors to hold deposits in different currencies. They provide potential opportunities for currency diversification and interest earnings.
Is a custodian needed?
You will need a custodian to store the assets you choose for your bond when opening an account with Utmost International. The custodian is an independent organization that is entrusted with the duty of protecting and managing the assets in lieu of the firm.
You, the investor, get to choose who will keep your bond safe. This is often the bank or investment firm with whom you are already acquainted, since they will have a thorough understanding of your financial status and can easily integrate their services with your existing ones. Having the freedom to choose your own custodian ensures that you’ll be working with a reliable organization that respects your needs and fits well with your current setup.
If you don’t choose a custodian yourself, Quilter International can do the task for you. Your bond’s assets will be held and administered by the selected custodian, who will be responsible for their security and management.
What happens if I pass away?
How your policy will be handled after a death depends if there are surviving policyholders. Quilter International has specific provisions in place to handle these situations and ensure a smooth transition of ownership.
When one bondholder dies and there are still active bondholders, the bond immediately transfers to the other bondholders. This means that the bond remains intact and the surviving policyholder(s) will assume full ownership and responsibility for the policy going forward. If the final policyholder dies, the bond will continue until its 99-year duration.
The ownership of the bond will be transferred to a designated beneficiary, trust, or legal representatives. Nominated Beneficiary: If there is a nominated beneficiary specified in the policy, ownership of the bond will be transferred to them. They will then become the new policyholder and assume control over the bond.
Trust: If the bond is held within a trust, the ownership remains with the trust itself. However, a trustee must be appointed as a policyholder to ensure proper management and administration of the bond within the trust structure.
Legal Representatives: The dead policyholder’s lawful personal representatives shall own the bond if there are no selected beneficiaries or trust arrangements made. These representatives are authorized to execute decisions involving the bond. They have the option of keeping the bond and naming a beneficiary as the new policyholder through a deed of assignment, or cashing in the bond and dividing the money among the heirs.
Review and update your policy beneficiaries and consider any relevant trust arrangements to ensure that the transfer of ownership aligns with your intentions upon your passing. This allows for a smooth transition and ensures that the proceeds of the bond are distributed based on your wishes.
What are the positives and negatives of the Collective Redemption Bond?
There are benefits and drawbacks to the Collective Redemption Bond that investors should weigh carefully.
One positive is that it gives investors access to numerous investment options, which may reduce your exposure to risk and increase your potential for profit. The product is managed by seasoned professionals who are adept at choosing and overseeing the underlying assets, which is another perk. Investors who would rather have experts make their financial selections may find this attractive.
As an added perk, the Collective Redemption Bond often provides liquidity to investors by extending redemption opportunities at set intervals. It is also more open since it welcomes participation from a broad variety of investors, not just institutional ones.
Fees, including as management and other expenditures, are a major issue with the Bond since they reduce profits on investments. It’s helpful to compare the advantages of the offering against the expenditures involved in becoming a member and paying the accompanying fees.
The delegation of investment decision-making authority to the fund management also means that individual investors have less say over the particular investments undertaken. Those who want a more active participation in their portfolio management may be dissatisfied with this structure.
In addition, the Collective Redemption Bond is vulnerable to market risks, which means that investors’ money might decline in value if the CRB’s holdings experience price swings. It’s also possible that investors’ ability to withdraw their money when they want to be limited by redemption frequency or timing limits.
Utmost International Collective Redemption Bond Review: Final Thoughts
You should be careful due to possible weaknesses of the offering that might lead to unanticipated costs. There may be hidden costs that aren’t very obvious. Customers who engage with commission-based advisors may wind up paying charges that are hundreds of percent greater than those of customers who deal with upfront fees.
Although the Utmost International Collective Redemption Bond comes with certain advantages, prospective investors should still do their homework and ask questions to avoid any unpleasant surprises. If investors have a firm grasp of the costs and ramifications of the bond, they may make educated judgments and realign their investing strategy appropriately.
Pained by financial indecision?
Adam is an internationally recognised author on financial matters with over 830million answer views on Quora, a widely sold book on Amazon, and a contributor on Forbes.
