Investment life insurance more commonly known as UNIT-LINKED is a way of investing in international assets through life insurance. The key difference between UNIT-LINKED products is that part of the accumulated amount is put into investment instruments that can bring the owner an income that significantly exceeds the capabilities of other insurance programs.
We have prepared a description of the most popular ways to manage monetary assets, compared their pros and cons, and created a comparative table that clearly shows all the advantages of the UNIT-LINKED Insurance Policy.
OPTION NO.1. YOU ARE PASSIVELY INVESTING IN A UNIT-LINKED INSURANCE POLICY
This case requires a minimal investment of your time. After receiving professional advice, it only takes a few hours to complete the transaction. In addition, you always have 2 more weeks to pay back the investment if you change your mind. There is no need to monitor the situation as you are guaranteed a certain income depending on the product and the chosen strategy.
Under this cumulative insurance contract, you do not pay for risks that may not even occur. The entire amount is returned to you at the end of the insurance period with exceeding savings. The refund is guaranteed.
If you have any questions you can always contact your personal consultant.
You know exactly how much you will pay for account maintenance – as a rule this is 1% of the amount.
– Quick registration and verification;
– Safety of funds in the full 100% amount;
– Guaranteed income;
– Targeted inheritance of funds in the event of the owner’s passing;
– Flexibility of conditions;
– Tax preferences;
– Indivisibility in divorce and other civil lawsuit procedures;
– Inaccessibility from fiscal and criminal lawsuits.
The main purpose of this agreement is to ensure the legal safety of your funds, tax benefits and conditions for inheritance.
OPTION NO.2. YOU INVEST INDEPENDENTLY THROUGH A BROKERAGE ACCOUNT
This option is suitable for investors who are ready to manage their own portfolio and be responsible for their income. To open a brokerage account, you need to pass a complex legal check – Compliance and KYC (Know Your Client).
To start investing, you need to analyze the financial market as well as develop a strategy for buying and selling valuable documents. These procedures require special training and if you are not sure what you are doing there is a high risk of losing instead of multiplying of funds. If you buy funds or put the money in trust, there is a risk of not achieving the desired result. Ask yourself the question, how actively and in what timely manner will you be able to perform speculative operations to increase profitability?
For each transaction of purchase or sale of the Central Bank (valuable documents), a small commission is charged, on average 0.1%. However, if the transactions are carried out frequently, the total amount can significantly affect the final income.
One of the main disadvantages is that the brokerage account is subject to:
– automatic exchange of information;
– all kinds of penalties in court decisions;
– loss of funds from the account in case of bankruptcy of the company (or the minimum amount, depending on the country of the broker);
– lack of guarantee, tax benefits and inheritance.
The main advantages include:
– direct ownership of the Central Bank;
– relative liquidity;
– flexibility in decision-making (although this is not always a plus).
The main purpose of a brokerage account is to invest money in valuable documents by your own efforts, respectively, having the necessary knowledge and experience.
OPTION NO.3. YOU MAKE A BANK DEPOSIT
The deposit is considered one of the least risky instruments. However, with inflation these investments will no longer be successful — as with constant crises and fluctuations in the Dollar, Euro, and other currencies.
If under some circumstances, you close the deposit earlier than the specified period that is you terminate the contract with the bank then you lose your profit. In addition, banks are now considering the types of deposits that cannot be closed ahead of time.
Keeping money in foreign banks requires having an appropriate bank account and passing a more complicated Compliance and KYC legal check as opposed to investing through a brokerage account.
Advantages of bank deposits:
– low risks – as long as the deposited sum does not exceed the guaranteed compensation amount;
– minimum threshold for investment;
– no time spent on investing;
– the ability to top up the deposit;
– simplicity and clarity of the investment tool.
– low interest on deposits;
– small amounts of guaranteed payments;
– available only for existing customers;
– complex legal Compliance and KYC verification;
– loss of profit in case of early termination of the contract or withdrawal of money.
The main purpose of placing a deposit in a bank is a passive and long-term investment.
OPTION NO.4. YOU KEEP THE MONEY IN A BANK ACCOUNT
It is not so difficult to open a bank account if you are a resident of the bank’s country. You can withdraw the required amount at any time, transfer your funds and pay for purchases if necessary.
To secure your funds you will need to issue additional insurance contracts and take into consideration the possibility of disclosure of the bank’s secrecy.
The main expenses should include the bank’s commission for account maintenance and money transfers.
Among the advantages:
– there are no restrictions on the terms and withdrawal of your own funds;
– it is convenient to receive cash at an ATM and pay for goods in cash.
Disadvantages of keeping funds in a current account:
– no capital gains;
– the money is subject to debit depending on the executive document;
– risk of bankruptcy;
– risk of the bank facing liquidity problems due to bankruptcy;
– changes and increases in account maintenance fees.
The main purpose of such a deposit is the daily use of funds without taking into consideration increase in profit.
Please, see the comparative table here.
The information is provide by international consulting company Aligorex Group.