A friend of a friend … asked moi to evaluate the Golden Life Savings Insurance Plan II (1121NWLA6) from China because their relative was considering taking it out. An added bonus is if they take it out, it will reduce their aged care fee by X each month.
I'm meant to be a past expert in financial matters and so was asked to read the policy and advertising/example document and give feedback. I said no, doing this is majoring in the minor things. There are more important considerations that out weight the marketing fluff.
Initial thoughts/queries:
- Purchase price US$250k over 5 years, paid to a Chinese insurer. Assuming everything is fair dinkum, and I have no understanding of Chinese (financial) laws, etc, if this business goes bust, from the Evergrande experience, foreign investors will be “hung out to dry", that is, local investors are prioritised.
- This is a 130 year endowment policy with options to change the policy owner. Western companies moved away from these products decades ago due to capital requirements to back the product, etc. How can this company obtain the capital, are there regulators equivalent to APRA in China, and how stringent are they? The company is majority owned by the Ministry of Finance - will unsold land/properties be used to back this product, etc.? And who invests for up to a 130 year term, why not 1000, etc.? How do you value the options (are they throwing it in frivolously?)?
- The potential buyer's children are in Australia - what is their ability to take out any money from China?
Does anyone have any experience with these products and/or do you have any feedback?
Isn't there a ozbargain China