Many Expats Invest In Insurance Linked Investment Schemes: Here’s Why You Need To Avoid Them



If you’ve been investing money regularly in the stock market over the past 1, 3, 5, 10, 15 or more years, you’ve made a decent profit.

If you had started with $1000 and added $1000 a month into global stocks, here’s what it should look like over different time periods.

Starting with $1000 and adding $1000 a month into Global Stocks

Time Periods Ending July 31, 2016

Years To Grow 20 10 5 3 1
Total Contribution $241,000 $121,000 $61,000 $37,000 $13,000
End Value $593,712 $193,719 $78,425 $41,162 $14,753
Profit $352,712 $72,719 $17,425 $4,162 $1,753

Source:, starting with $1000 and adding $1000 every month into Vanguard’s Global Stock Market Index (VT).  Edited:  September 14, 2016.  Amounts invested were initially understated by $1000 in each scenario.  

Let me explain the table. 

If you had started with $1000 and invested $1000 per month over the past year in a global stock index, you would have invested a total of $13,000.  By July 31, 2016, it would have grown to $14,753.  Let me explain what I mean by “global stocks.”  This doesn’t represent a single country’s stock market performance.  It represents a cap-weighted average of virtually every country’s stock market over these durations.  The good.  The bad.  The downright ugly.

If you had done the same thing over the past 20 years, you would have added $241,000.  By July 31, 2016, the money would have grown to $593,712.

You’re saying you didn’t make that kind of money?

What?  Over the past 1, 3, 5 or 10 years, you didn’t make a profit?

If that’s the case, there’s likely one explanation.

You invested in an insurance linked offshore pension. 

In 2016 I spoke at the International School of Lausanne, in Switzerland.  As usual, I spoke about the horrific fees that most offshore pensions charge.  I met a woman who I’ll call Selena.  She teaches at the school. Like many expats, Selena was sold an offshore pension by a British gentleman (why are they always British and male?) The fees are crushing: roughly 4 percent per year.

The redemption penalties are huge.  If Selena wants to withdraw her money, she’ll practically lose her skirt.  The advisor received huge commissions for selling such a product.  The parent company needs to recoup that money.  That’s why they want to keep Selena’s money.  They need to bleed her slowly, so they can recoup that commission. 

The advisor’s hunger for the commission cost Selena plenty.

“Hello,” said the suavely dressed Brit when they first met. “Let me introduce you to some offshore pension funds.  You’ll make a lot of tax-free money.  Have a look at these performance charts.”

The advisor showed Selena some funds that had spectacular recent returns. 

“We’ll get you into these great funds,” he said.

The advisor set up a monthly purchase plan.  Selena began to purchase these previously hot funds.  Does she have exposure to U.S. stocks?  No.  Does she have exposure to European stocks?  No.

Why doesn’t she have exposure to the world’s two biggest markets?

Neither of those markets had recently done well, so he didn’t bother adding them. 

He needed to impress Selena.  If he had showed her a diversified global portfolio, he might not have made the sale.  That’s how it begins.

Things roll downhill from there.

 Between 2008 and 2016, Selena added money monthly.  Her contributions total $39,951 USD.  But her portfolio is only worth$29,006.  Globally, most of the world’s markets have risen since 2008.  But Selena lost money.  Such is the case with most offshore investment platforms.  Fees are outrageous, yes.  But the portfolios are created by commission hungry knuckleheads.

It would have been tough to lose money since 2008. But Selena’s advisor found a way. 

I wish she were an exception.

More than half of Selena’s portfolio is made up of Chinese stocks.  That’s Freddy Krueger crazy.  Since the Chinese stock market opened to foreigners in 1993, it has barely made money.  But it did spike (briefly) before Selena met her advisor.  It gave him a selling point.  That cost Selena money when Chinese stocks dumped.

The rest of her portfolio was stuffed with gold and Latin American funds.  Each had delivered a decent run, before Selena met the shark. They crashed after that.

Smart investing isn’t about building a non-diversified portfolio stuffed with yesterday’s winners.  In the U.S., if an advisor did that, it would be grounds for a lawsuit that the client would win.  But the expatriate world of offshore pensions is like the crazy wild west. 

Selena’s says that at her previous school, the administration encouraged teachers to invest with this advisor’s firm.  The administration, unfortunately, didn’t know better.

Here’s a screenshot of Selena’s account.

Selena’s Aviva Investment Portfolio


Notice the gold funds.  They’re the first ones listed above.  Next, you’ll see the Latin American Funds.  Finally, notice the First State Regional China Fund.

In the screenshot below, you can see that more than 50 percent of her portfolio is invested in this Chinese fund.

Notice (in the screenshot below) that she has contributed $39,351 since 2008.  You can also see the portfolio’s value:  $29,006.35.

Global stocks went up.  But Selena lost money.


If you’re invested with Aviva, Friends Provident, Zurich International, Generali or any other insurance linked offshore pension, your story is probably similar. 

Now let me tell you something creepy.  If you’ve invested with one of these firms, I can tell you what you own.  No, I can’t read your mind.  But I know when different geographic sectors had their time in the sun.  If you started in 2007, you have a huge emerging market stock component.  You might not own much else. 

If you started in 2010 or 2011, your portfolio will be stuffed with gold. 

If you started this year, your portfolio will be filled with U.S. stock funds.  It could also contain some emerging markets, if you began halfway through the year.  Emerging market stocks have had a strong recent run.  The U.S. has been the best performer for a decade.

Your advisor will ignore Europe and Developed Asia.  Instead, he’ll prefer to wow you with rearview mirror driving.  That kind of practice can cause an ugly crash.

Selena isn’t alone.  This expat story is far too familiar.

Don’t invest in an insurance linked offshore pension. Their fees are too high. 

Commission hungry sharks prowl expat waters. These predators have shockingly low morals, knowledge or both.

Learn to build a diversified portfolio of low cost ETFs. 

Or, you could hire an ethical advisor to do the work for you.

Andrew Hallam

I’m a financial columnist for Canada’s national paper, The Globe and Mail, as well as for AssetBuilder, a financial service firm based in Texas. I’m also the author of Millionaire Teacher: The Nine Rules of Wealth You Should Have Learned in School and Millionaire Expat: How To Build Wealth Living Overseas. My mission is to educate, motivate and inspire people on basic retirement planning and best practices for investing, using evidence-based strategies. I'm happy to comment on your questions.

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18 Responses

  1. Lmc says:

    Hi Andrew… What do you suggest for people in Selena’s situation? Do you think it’s better to pull out and lose maybe a third of your invested money? Or to ride it out?

  2. Alan CAUGANT says:

    Hi Andrew,

    Thanks a lot for your nice book very inspiring. I am French expatriated for more than 10 years, I would like to know if you recommend any particular advisors located in France?

    Thanks in advance for your support.


  3. oscar says:

    Hi Andy the table showing a 2753 USD gains from a 12000 contribution by investing on us stock ETF..?? This does not look right to me… This is more tha 20% profit in one year ( June 31 2015 to june 31 2016)… Which ETF gave those profits?? I really want to know.. For surr is no is abyv of the ones you reccomend in you books… I follow an ETF portfolio and is NOT even close to those returns…

    • Thanks Oscar,

      I overshot by $1000 on every example. My fault. I’ll adjust it.

      Check it out at

      Enter a starting amount at $1000. Then enter $1000 added per month. All told, it would actually be a $13,000 contribution (not $12,000) and the end value would show a one year profit of $1,753, not $2,753. If you enter the U.S. stock index, the results would be better. This all being said, anyone dollar cost averaging would have done well. But I’ll have to deduct the $1000 starting amount from each scenario.


  4. Sean says:

    Good morning Andrew,

    I am on the night shift here in Qatar and am reviewing notes i made whilst reading your two books. Simply put, thank you for sharing your knowledge, your books were a breath of fresh air and exceptionally enjoyable to read. I am now 3/4 the way through The little Book of Common Sense Investing ( Bogle) and i see you are both singing from the same hymn sheet !!

    I am an Irish expat from the north of Ireland ( hence a UK tax payer ), living in Qatar for 4 years. I would like to commence investing via the TD Investing platform following the strategy espoused by yourself, Bogle, Bernstein and Buffett. I would like to invest in low cost Vanguard type funds.
    TD offer 18 such funds, however they do not offer any Total Stock Market funds from Vanguard.

    The funds below are available:

    Vanguard US 500 stock index @ 0.25%, (35%)
    Vanguard US Bond Index @ 0.25% (35%) I am 35 years old.
    Vanguard European Stock Index @ 0.35% (30%)

    Would these three provide sufficient diversification ?
    My only concern is that there is no emerging market nor Asia/Africa component within that selection. I do note however that Vanguard offer the Japanese stock index and Vanguard Global Small Cap Index both @ 0.30%.
    Would it be worth adding these to the initial three for more diversification ?

    All the funds are domiciled in Ireland so no issues with US tax/inheritance. In addition the Qatari riyal tracks the USD so im minded to trade in USD. Plan would be to commence the fund with 15000 USD and then make monthly 2000 USD contributions. My wife and I do not know where we will eventually settle but likely back in Ireland.

    Any feedback would be appreciated.

    Kind regards,


    • Hi Sean,

      Because you have a copy of my expat book, I can be brief with this response. Purchase the recommended ETFs in the book. Doing so would incur lower costs than what you have presented here. And it will be more globally diversified.


  5. Steve says:

    Hi Andrew,

    Thank you for all your work in this area. I purchased your expat book last week and I am in the process of implementing a lot of your advice.
    Unfortunately I too was snared in the Friends Provident trap and getting out has cost me a years worth of savings. I will be doing my very best to alert as many expats as possible about this issue and I trust karma will eventually catch up with these people.
    I was wondering if you have any insights or comments on Swissquote and the services/fees they offer.
    As an Australian expat based in UAE it looks quite reasonable at first impression but I wondered if an expert eye sees something that I don’t.

    Thanks again and keep up the great work

  6. Noel says:

    Hi Andrew, any chance of you writing a book on insurance?

    I am on the fence for buying life insurance. Alot of my peers are buying. but I only have a term insurance, which covers up to 65yo only. Reason for not buying is because of the extra money I can put aside for investments laid out in your book.

    Can seek your thoughts on buying term vs life insurance?

    Thanks Andrew,

    • Noel,

      Don’t put it this way to your friends….but term insurance is for smart people 🙂


      • Mitch says:

        Hi Andrew,

        Any of your resources/blog you can share more about Term vs Whole life insurance? I’m on the brim of decision making – my advisor proposed a Whole life insurance includes early C.I. which seems “logical” to get. Just wondering if I can read more about your thoughts on this. Thanks!

        • Mitch,

          If you have met someone who recommends Whole Life Insurance then you are dealing with a master charlatan. Yes, he seems charismatic. Yes, he seems caring. Yes, he might take you out for dinner and remember your children’s birthdays. But deep down, you are dealing with a silver tongued snake. Buy term insurance. NEVER buy whole life. It’s a massive commission for him and you get the long-term shaft, despite what his sales pitch says.


          • Lidia says:

            Hi Andrew,
            Thanks for all the good work and advice. Regarding whole life insurance, does the “tax-free” benefit upon death worth consideration? I live in Canada now and may retire here.

          • Hi Lidia,

            Never buy a whole life insurance policy. These are the worst things you can buy. If you want insurance, buy term life insurance. Always keep your investments and your insurance separate.


  7. Alexander says:

    Dear Andrew,

    Thank you so much for your blog and work.

    On the topic of insurance, do I understand well that there’s no need to buy endowment / investment linked insurance if you already have a balanced portfolio of ETFs?

    I was considering to buy one, but reading your book changed my mind.

    From what I see now, term insurance is the only plausible solution.

    On a side note, is dollar cost averaging always recommended vs. a lump sum investment?

    Thank you again, and wish you happy holidays.

  8. Shine says:

    Hi. I am doctor Indian expat, with a mortgage loan of 600000 aed shortly to be started in Dubai. With it of course I will have to take up the decreasing life insurance that the bank is tied up with. I am 38years old with some life insurance cover home country as well. I have been suggested to take a term insurance of Zurich ITA with critical illness. My confusion is should I go ahead with decreasing life insurance not of Zurich company only or take up ITA Zurich term insurance as well along with decreasing life insurance. Both required together or I can add term insurance later after 4-5years. ..Calculating the cost of increased premiums later vs double insurance now..please guide urgent. Need to take a decision in a day or two. Thanks

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