Investors Trust S&P 500 Index Savings Plan

The Investors Trust S&P 500 Index Savings Plan is a contractual, regular-premium offshore savings plan, issued as investment-linked insurance from the Cayman Islands. It is arguably more attractive than some contractual savings schemes, but it has been overtaken by cheaper, more flexible and less complex ways to achieve the same goal.

Several things give AES pause. The plan locks you into a fixed term of 10, 15 or 20 years, and surrendering early forfeits the remaining initial units, an expensive exit. The charging structure is layered and opaque, combining an annual administration charge, a monthly policy fee and a monthly structure fee. The headline 'principal protection' is not a simple guarantee either: it is derived from structured notes issued by third-party institutions, so you carry their counterparty risk, and the protection and loyalty bonuses fall away if you miss premiums, reduce contributions or take a partial withdrawal. In other words, the guarantee depends on conditions that real life often breaks.

For most internationally mobile professionals, a low-cost, transparent and flexible portfolio achieves more, with none of the lock-in. A plan like this should never be taken out unless you are certain you can contribute the full amount for the entire term.

If you already hold this plan and it is worth around GBP 500,000 or more, a no-obligation Second Opinion will show whether staying in it still serves you; there are often real benefits to moving even after allowing for surrender charges.