Should you invest in the Zurich Wealth Accumulation Plan? A review

Zurich International profile and review

The Zurich Insurance Group, of which Zurich International is a part, is a household name in the international and domestic insurance industries alike.

As of January 2020, the company had over 600,000 customers, including over 400,000 corporate employees through group life and disability solutions and around 200,000 retail customers, across more than 215 countries and territories.

Investment advice and securities such as annuities, life insurance, and mutual funds are the mainstays of Zurich International, a financial services firm and broker-dealer that caters primarily to the expat market.

We have talked about them before, specifically their expat savings program Zurich Vista.

In this article, we will take a look at the Zurich Wealth Accumulation Plan, its benefits and drawbacks, to help you decide if you should invest in it.

Take note that the information we provide is based on our understanding of Zurich International’s products as of the date of publication and may change in the future.

If you are looking to invest as an expat or high-net-worth individual, which is what I specialize in, you can email me (advice@adamfayed.com) or WhatsApp (+44-7393-450-837).

Should you invest in the Zurich Wealth Accumulation Plan
Should you invest in the Zurich Wealth Accumulation Plan? | Photos: Pexels

What is the Zurich Wealth Accumulation Plan?

The parent firm of Zurich International, Zurich Insurance Group Ltd., is Switzerland’s largest insurance provider. According to Forbes’ Global 2000s list, the company was the 112th largest public corporation in the world in 2021.

General Insurance, Global Life, and Farmers are Zurich Insurance Group’s three core business segments. There are 60,000 people working for or using the company in 215 different countries and territories. The shares of the corporation can be purchased by the general public on the SIX Swiss Exchange.

In addition to traditional banking and investment advisory services, Zurich International now provides life insurance options including annuities and individualized retirement plans.

Customers can choose from a variety of funds offered by Zurich International. In addition to the personal Vista, the company and group pension plans are available.

Zurich has a solid reputation in the insurance industry, especially among expats, for both its compliance standards and the products and services it offers its customers.

What does the Zurich Wealth Accumulation Plan offer?

The Zurich Wealth Accumulation Plan gives you a solid foundation on which to build your wealth, at your own speed. Diversify your currency holdings over a number of ETFs, and top off your investments whenever you can.

An initial deposit of $30,000 is required, and further contributions of at least $2500 can be made whenever convenient or on a predetermined schedule thereafter.

The Zurich Wealth Accumulation Plan may be a good fit if you want to manage and increase your wealth in a flexible, term-free manner.

A wide variety of mutual funds, target date funds, and managed funds are available through this plan.

For instance, blue chip companies, gold, sovereign and corporate bonds are common holdings for these funds.

The Zurich Wealth Accumulation Plan is an insurance investment vehicle. A policy like this is tailored for meeting financial needs like wealth transfer, tax planning, and wealth protection.

It is also an effective means of transferring property. In the case of your passing, you will be able to designate a beneficiary to inherit the plan’s assets.

When it comes to long-term wealth accumulation and maintenance, the Zurich Wealth Accumulation Plan could be a good bet.

You are free to take your investments with you when you leave the UAE. You can view the investment information at any moment through the web portal.

The plan’s minimal surrender charge applies only until the third anniversary of the initial and subsequent lump sum investments.

The advantages provided by the Zurich Wealth Accumulation Plan are as follows:

  • Enable you to contribute to your investment goals with a single premium payment;
  • Provide a great deal of adaptability by letting you pay additional premiums whenever you like;
  • Put all of your payment into your insurance plan;
  • Allow for periodic withdrawals and, if desired, partial surrenders;
  • Maximize the long-term growth of your investment capital;
  • Provide a diverse selection of investment options to match your risk tolerance;
  • Provide a selection of currency options;
  • After the insured person dies, a lump payment is paid out; In the event of the life insured’s death during the first 15 years of the policy, the death benefit will be increased.

In exchange, you, the policyholder, promise to disclose all information requested by Zurich International and provide complete, honest, and correct responses to all application questions.

Be sure you have a firm grasp on the specifics of your policy and the funds you select, including any fees or other costs that may be incurred.

By using the Zurich Wealth Accumulation Plan you are encouraged to save money away for the long haul. If you need help figuring out what this entails, you are advised to consult a financial advisor.

Before making any modifications to your policy, or whenever your circumstances change, you should get professional guidance.

If your health, family history, profession, or country of residence has changed, you are also obliged to let Zurich International know.

What are the key features of the Zurich Wealth Accumulation Plan?

The Zurich Wealth Accumulation Plan is accessible to trusts and businesses as well as to individuals and joint owners.

The policy’s life insured basis can be one of the following: your own life, last death, in which case you are both the policy owner and the life insured; or for the life or lives of another, in which case you are both the policy owner and the life insured.

You can also apply for joint lives on a last death basis, which means that you and another person are both the policy owner and the life insured.

The policyholder must be at least 18 years old when the policy starts. For those who want to use the plan, there is no upper age limit.

The person must be at least two years old for the life insured. Likewise, there is no upper age limit.

The Zurich Wealth Accumulation Plan is a whole-life insurance policy, hence there is no set duration for the coverage.

You select the policy currency when you apply; it is displayed on your policy schedule and cannot be modified. The choices are: US Dollar, United Arab Emirates Dirham, Qatari Riyal, Sterling, Euro, or Bahraini Dinar.

There are many ways to pay for premiums, including standing orders, telegraphic transfers, UAE direct debit for additional premiums, direct debit for additional premiums, and checks.

Zurich International will pay out 101% of the policy’s surrender value as soon as it gets reliable notice of the death of the last life insured.

An increased death benefit will be paid out under the following conditions:

  • The enhanced death benefit will be equal to the greater of the total premiums paid less any withdrawals made during the first fifteen years of the policy or 101% of the policy’s surrender value if the youngest Life Insured was under the age of 50 when the Policy started and the last Life Insured died within fifteen years of the Policy start date.
  • The enhanced death benefit will be equal to the higher of 101% of the policy’s surrender value or the sum of all premium payments less any withdrawals made during the first five years of the policy if the youngest Life Insured was between the ages of 51 and 60 when the Policy started and the last Life Insured passed away within five years of the Policy’s start date.

The enhanced death benefit will not be given if the Life Insured died from self-inflicted means.

What funds can you invest in?

Zurich International provides a diverse range of funds, the majority of which are managed by third parties. These funds offer a diverse range of investment styles, risk levels, and asset classes.

These are a few examples: Equities, cash, fixed-income securities, and money market funds that invest in cash, money market instruments, and foreign fixed-income securities are all included in the managed fund portfolio of Zurich International.

Take note that some fund managers charge a fee before investing your money and charge an annual management fee. These changes will be reflected in fund prices.

Otherwise, your entire payment is invested in the funds you select. When you invest in a fund, you are purchasing units, which are similar to shares, in the fund of your choice.

Depending on how well the investments made by the funds perform, the value of the units may increase or decrease.

Your policy’s value will always be equal to the current value of the units in the funds you have selected, less any fees. Your surrender value will be the current value less any unpaid surrender charges.

Instead of choosing the funds yourself, you may want to designate a fund investment adviser to offer investment guidance or to manage your investment on your behalf by providing switch orders directly to us.

You have the choice of automatically deducting money from your policy to pay your selected adviser’s fund investment adviser charge for the services they render.

What are the risks?

Because purchasing a Zurich Wealth Accumulation Plan entails a medium- to long-term commitment, you might receive less money back than what is indicated if, among other things, investment growth is less than anticipated, charges rise above those shown, or you withdraw more money from your policy than is indicated.

You might get less money than you invested since your policy will be vulnerable to market changes, which might lower the value of your investment.

If you pay premiums in one currency but invest in funds denominated in another, or if certain funds invest in different currencies, the value of your insurance will be impacted by currency movements. Please be aware that there can be sizable changes in the exchange rates between the currencies.

The fund(s) selected will determine the amount of risk and potential investment performance. The Zurich International website provides information on the unique risks connected with investing in a particular fund.

Once your policy is issued, you may also keep up with its details online through Zurich International Online (ZIO).

We shall impose a surrender charge if you fully terminate your policy before the fifth policy anniversary or within the first five years following the payment of additional premium.

These fees could change at any time. Unless it is not reasonably possible under the circumstances, Zurich International will give you written notice of such modifications with at least three months’ advance notice.

What are the charges?

It is critical that you understand the charges associated with your policy. You will get at least three months’ written notice of any changes from Zurich International, unless it is not reasonably possible under the circumstances. Zurich International maintains the right to amend or increase costs.

Establishment fee

An establishment charge is applied to each premium collected and is withheld for up to five years from the date of payment.

This fee is taken out of your fund(s) at the beginning of each policy month for a maximum of five years.

Policy Management fee

For the duration of the policy, a monthly management fee is added to the policy value. The policy value at the moment the charge is assessed determines the percentage charge.

At the beginning of each policy month, Zurich International deducts this fee by canceling units from your fund (s).

Yearly Policy Fee

For the term of the insurance, there is a yearly policy charge; however, once your total premiums reach USD 60,000, AED/QAR 220,000, GBP 40,000, EUR 48,000, or BHD 22,000, the price is waived.

At the beginning of each policy month, Zurich International deducts this fee by canceling units from your fund (s).

There will be variations in the annual management charge (AMC) and any other fees assessed against funds.

The Zurich Collection Handbook provides specific information on the various fees for external funds (Mirror, Managed and Money funds).

Zurich International funds have a managed fund AMC of 1.5 percent and a money market fund AMC of 0.7 percent. They are shown as a proportion of the total value of each fund.

Because they are subtracted each day from the price of each fund, you do not directly pay these costs.

Surrender charge

The surrender fee is waived if you fully surrender your insurance during the first five years. The fee is added to each premium when the policy is fully relinquished. Each premium is billed monthly over a five-year period.

Before paying out the ultimate surrender value, Zurich International will deduct the surrender charge from the policy’s value.

Transfer fees

Transferring money or rerouting premium payments are free. There is a fee of 0.175% of the currency swap value when switching between funds in various currencies. As soon as the currency changeover is finished, units that have been cancelled will be used to offset the switch charge.

Cost of currency conversion

If you put premiums into the policy or if Zurich International takes money out of the policy in a currency other than the policy currency, you will be charged.

At the conclusion of each working day in the Isle of Man, we receive an exchange rate from Bloomberg. The cost is 1% higher. The fee is represented in the currency exchange rate rather than being subtracted in units.

Investment consultant fees

If you designate a fund investment adviser to provide us with instructions regarding your funds and agree to pay them a fee for their services, this fee will be assessed.

In accordance with what you and your fund investment adviser have agreed upon, the fee will be up to 1.5% of the value of the units per year.

Deducted on a monthly basis in advance by canceling units at the start of each month of the policy, as long as your contract with your fund’s investment adviser is still in force.

The Zurich Wealth Accumulation Plan is mainly catering to expats in the Middle East
The Zurich Wealth Accumulation Plan is mainly catering to expats in the Middle East. | Photo: Pexels

How does the Zurich Wealth Accumulation Plan work?

Each plan premium is allocated at 100%. Additional premiums are permitted at any time and are allocated at a rate of 100%.

You can withdraw funds on a regular basis or in installments. You can choose to take regular withdrawals when you set up your policy or at any time during the policy’s life. You can schedule this to happen monthly, quarterly, half-yearly, or yearly.

Unit cancellations are used to fund regular withdrawals. The minimum regular withdrawal amount is $500 USD, AED/QAR 1,850, GBP 325, EUR 400, or BHD 185. Zurich International will notify you if these minimum amounts are raised.

Regular withdrawals have no maximum value, but they are subject to a minimum surrender value of USD 20,000, AED/QAR 73,500, GBP 13,000, EUR 16,000, or BHD 7,400.

Unit cancellation funds partial surrenders, which have a minimum partial surrender of USD 1,000, AED/QAR 3,700, GBP 650, EUR 800, or BHD 370.

There is no upper limit, but the withdrawal is subject to the remaining minimum surrender value of USD 20,000, AED/QAR 73,500, GBP 13,000, EUR 16,000, or BHD 7,400.

If a full surrender is made during the first five years of any premium paid, a charge will be incurred.

You have 30 days from the date you receive your policy documents to write to Zurich International and request a penalty-free cancellation. By contacting the company or your financial advisor directly, you can cancel your policy before receiving your policy documents.

If you need to file a claim, you should contact Zurich International first. Your financial advisor will also be able to help you.

The individual filing the claim should notify the company as soon as possible. The terms and conditions contain complete instructions on how to file a claim. These also include a comprehensive list of the reasons why a claim may not be paid.

Each benefit will be subject to its own set of exclusions. In general, if the policy was fully surrendered or terminated prior to the filing of the claim, Zurich International may be unable to pay the claim.

The same is true if the claim arises directly or indirectly from the life insured’s active participation in any of the following: war or warlike operations (whether declared or not); invasion, hostilities, mutiny, riot, civil commotion, civil war, rebellion, insurrection, or usurpation of government power.

A claim will also not be paid if it is the result of a foreign enemy’s act; any activity (military or otherwise) or conspiracy that causes or leads to the declaration of martial law or a state of siege; or terrorism or conspiracy to commit terrorism, which includes any activity that endangers human life or causes property damage.

What else should I know about the Zurich Wealth Accumulation Plan?

Zurich International Life is a subsidiary of the Zurich Insurance Group, based in Zurich, Switzerland.

The Group is a global insurer with well-known financial strength, a skilled workforce, and a well-known brand. The group, acting as one team with one goal, takes a global approach to resources and capabilities.

The Group uses these strengths to assist our individual, commercial, and corporate customers in understanding and mitigating risk.

Zurich International exists to assist its customers in understanding and mitigating risk. Everyone faces risk in their daily lives. Individuals, families, businesses, and communities can only thrive if they are protected from critical risks.

Zurich International aims to assist its customers in managing risks, making their lives more secure, and assisting them in growing their businesses.

As a result, the Zurich Wealth Accumulation Plan is intended to meet the legal and regulatory requirements of customers residing in the country where it is purchased.

If the policy owner or the life insured moves to another country during the policy’s term, the policy may no longer be appropriate.

Laws and regulations in another country may impact our ability to service the policy in accordance with the terms and conditions, and Zurich International may no longer be able to provide all of the benefits under the policy.

For example, the company may be unable to process policy switch instructions or accept future premiums. Any change in the policy owner’s country of residence must be reported to Zurich International prior to the change becoming effective.

In these situations, and with the policyholder’s consent, the firm may give contact information to another Zurich Insurance Group company in order to determine whether an alternative product is available that is appropriate for the new circumstance and the policyholder’s country of residence.

The aforementioned clauses may apply to any policy assignment to a person who lives in a different nation than the policy owner.

As a foundation for your investment and protection policy, the Isle of Man offers several advantages, including:

The Isle of Man has had its own government for more than a thousand years and has one of the longest-running continuous parliaments in the world.

The island has strict rules and strong insurance and policyholder protection laws. It is a well-known, growing financial center.

The Isle of Man Insurance Act of 2008 makes sure that senior management and controlling parties of insurance companies are legitimate and that the businesses are financially stable.

The Policyholders’ Compensation Fund will pay policyholders up to 90% of the insurer’s liability under the contract, according to the Isle of Man’s Life Assurance (Compensation of Policyholders) Regulations of 1991, in the event that an Isle of Man authorized life assurance company is unable to fulfill its obligations to its policyholders.

The plan would operate internationally, protecting policy owners regardless of where they reside, and be financed by a levy on the assets of the other Isle of Man-authorized life assurance businesses.

Investments held in the Isle of Man on behalf of our investors or insurance proceeds in the event of a successful claim are not subject to tax deductions.

You should be aware that the claimant’s personal circumstances at the time of the claim, including their country of residency, will influence how any payments received under this policy are taxed.

If your insurance coverage is owned by a trust or corporation, other tax laws can be in effect.

If you have any questions regarding how much tax you would owe as a result of this policy, please consult your appropriate financial advisor.

You should always seek professional tax advice; Zurich International Life is unable to give you individual tax advice.

Who is the Zurich Wealth Accumulation Plan for?

The Zurich Wealth Accumulation Plan is a single premium investment product. With this strategy, you can increase your investment as you go along by starting with a minimum of USD 30,000.

You can create an investing portfolio using a variety of funds from Zurich and other top national and international asset managers through the Zurich Wealth Accumulation Plan.

The plan is best suited for individuals who meet the following criteria:

You have built up a savings account or received a sizable lump-sum payout that you want to invest;

You have access to a wide variety of fund options through the Zurich Wealth Accumulation Plan. They provide you the chance to put together a portfolio of investments that fit your risk tolerance and time frame.

For the possibility of greater growth than a savings account, you are willing to assume a certain amount of risk.

A certain amount of danger comes with investing in money because money can go up as well as down. Zurich International’s financial advisers can assist you in determining the appropriate amount of risk for you, whether at the fund or portfolio level, as each fund has its own risk rating.

Your time horizon is at least five years. A lump sum investment over a number of years, like what you get with The Zurich Wealth Accumulation Plan, might be a good fit if your savings are intended for things like creating a retirement pot, buying a property, or paying off a mortgage.

You may not be a good candidate for the Zurich Wealth Accumulation Plan if:

You have never invested before. A novice investor might find the broad universe of funds offered by the Zurich Wealth Accumulation Plan a little intimidating. Consultants can help you determine whether a more straightforward plan would be a better fit for you.

You are not ready for money to lose value. The value of investments changes over time. You might want to think about other savings choices if you’re not comfortable with the potential that there might be times when your investment is worth less than you invested.

You want to be able to choose certain stocks for your portfolio and trade them every day. Investments are made into funds under the medium- to long-term bond known as the Zurich Wealth Accumulation Plan.

It does not provide the granularity or real-time dealing options that such platforms do because it is not a trading platform.

Should you invest in the Zurich Wealth Accumulation Plan?

Although the minimum transaction costs and transfer fees, currency exchange costs, custody fees, and other ancillary charges may appear lower on online trading platforms, they may ultimately be higher than the charges associated with the Wealth Accumulation Plan.

However, professional do-it-yourself investors would benefit more from using a platform like these. The Zurich Wealth Accumulation Plan is great for investors who are not market experts and do not want to spend all their time staring at their screens.

For some investors, the best part about the Zurich Wealth Accumulation Plan is that in addition to the initial commitment, you can continue making monthly contributions. This can serve as a systemic investment plan that is not based on a contract.

If you want to invest in AED on a regular basis but do not want to deal with currency conversion, credit card fees, or wire transfers, you may set up a recurring payment from your bank account or credit card.

Expats investing from the UAE may also benefit from the lower tax rates offered under the Zurich Wealth Accumulation Plan.

In our view, Zurich International’s products are only suitable for those with a high net worth who are willing to pay high fees, who have a significant amount of money invested in annuities or mutual funds, and who are committed to long-term savings plans.

There are better options available elsewhere if you are just searching for a straightforward savings account or a flexible investment with higher returns.

There are also superior advisor-based solutions as well.

Pained by financial indecision? Want to invest with Adam?

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Adam is an internationally recognised author on financial matters, with over 694.5 million answer views on Quora.com, a widely sold book on Amazon, and a contributor on Forbes.

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