How do they typically work?

The cost of the plans are typically upfront.  due to sales and admin costs. The client is then reimbursed some of that cost at the end of the plan, in the form of bonuses if they meet the strict rules and criteria.

A simple example of a typical client with a 10 year investment horizon.

If he or she makes every one of the 120 premiums (10 years x 12 months), the total costs of the plans are often a reasonable 1-2% per year.

Yet the above scenario assumes each payment is made. Very rare in truth!

If not all premiums are made however the landscape changes dramatically! Without bonuses and the extra incentives, the plans can switch from 1%-2% total cost to 4% – 5%. Quickly changing the outcome and results.

Premium holidays are possible on paper. However the normally each time make the plan more expensive using the above rational.