Cash has more to do with cycle touring than we'd like to admit.  The dream is to eventually do a long extended round the world tour, but that requires big bucks to pull it off.  Meanwhile, I'm happy enough with doing shorter tours in the holiday breaks while still earning money. 

The pandemic was a starting point to face the money beast and tackle it head on.  After all these years as an expat, I was no closer to the goal of a long-term cycle tour when living costs were much lower than back home and disposable income was higher.  So what gives?  Where the fuck was all the money going?

It boiled down to years of financial illiteracy and listening to advice from so-called financial planners, really sales sharks in disguise.  All these years I had been investing monthly premiums into a so-called "offshore investment account" as peddled by these salespeople.  Through a lot of detective work I later found out this was a cash-value life insurance policy.

What really bothers me about people selling these plans is the deceit laced into an otherwise decent presentation.  It is a very clever scam.  They go around saying all the correct things:  you need to save for retirement, the options are limited for expats, and these companies can help set up an offshore retirement plan.  Basically like a pension.  The plan promises a decent rate of return, it is tied to the markets, and is relatively secure.  The names they come up for the plan can be anything under the sun, but they tend to hide the fact they are using insurance as the investment vehicle.

Insurance is primarily supposed to be defensive, it is a transfer of risk.  For life insurance, the older you get, the more expensive it becomes.

It takes a real stretch of the imagination to turn this into an investment vehicle, but the marketers have done a very good job of that.  They start by saying that insurance companies invest the premiums into the markets to make their profit.  All true.   Next, they say that if you overfund your policy, the profits are then funneled back into your account which means you're effectively getting a high interest savings account.  For example if the premiums cost $20 a month for your age, you can put in $200 (the maximum allowed by the IRS) and then invest the extra money, which is stored as cash value.  They also say this extra money lowers the cost of your insurance when you age due to the cash value.  It all sounds enticing.

Unfortunately many people don't know this is a gigantic scam.  I certainly fell for it.  The complexity of cash value insurance is mind boggling and the fine print is beyond the scope of most people's brains to fully digest and understand.  So people sign up for this crap as it sounds like a pretty good deal.  Spoiler alert:  it isn't.   

Generali (later bought out by Utmost) is one the worst offenders in this regard.  While they are an offshore life insurance company, there are plenty of others doing the exact same thing on US soil.   Hint:  the skyscrapers of their offices show who is really earning a profit.  

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So why is this all a scam?  Your so-called cash value vanishes into all sorts of front-loaded hidden fees.  It is also notoriously hard to access.  You have to pay big time to access your own money, even borrow against your own money at high interest rates if you want an early withdrawl.

In my case is I started out with small premiums for a 30-year 'vision plan'.  Yeah I know I was an idiot for taking out a policy that long.  Due to the front-loaded fees, for the first couple of years nearly all the premiums went into paying the fees.  Another chunk went into insurance, and the very tiny remainder went as an investment.  As time went on, more and more went into the investment but I was already well behind due to the fees.

Most people would have quit after a few years of this horesehit and taken the losses.  My friends did.  But I was so determined to hold on and see it through that I lasted nearly 15 years, or halfway, in the hope of breaking even or making a profit.  It never happened.  I also tried to increase the premiums as a way to drive the growth faster, but it had the opposite effect.  Due to the the fine print, the hidden fees increased due to the increased premiums.

They had set up the trap like this on purpose.

Naturally you would think an investment with a so-called rate of return functions like compound interest that accumulates over time.  I ran calculations with a very conservative 6% growth rate, basically what they advertised.  I was shocked to find out that even with this, I could have saved over half a million by now.

So now, even if I break even in the policy and cash out my principle of $150,000 I technically don't "lose".  The whole thing will have become a glorified savings account. But the real loss is the opportunity cost.  That money could have gone into the stock market or even safe investments and easily made 2-3 times the amount of money I have by now.

There's no doubt that 15 years has been a huge waste, but thankfully I can still quit now and invest the money into something better.  By sticking with this horrendous insurance plan, the lost opportunity cost would only have further compounded so I had to get out now. 

I don't want to be too hard on myself because other people have also fallen victim to this massive scam, including those with masters degrees in finance.  It is one of the most popular scams going to this day.  The snakes who sell this do so with confidence and they do it on purpose because they know someone will buy.  But one thing is for sure, they'll pay attention when they lose income from clients such as myself who have woken up.  

With that in mind, I will do everything I can going forward to warn people about this and put these con artists out of business.

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