The Impact On Return

It's time to look at the impact on the bottom line. Extending the time period to 20 years, we compare the three insurance cases against the 6% p.a. raw return baseline control. The figure below illustrates the effects on return. The appendix contains the calculations in full.

Figure 9: Control - 6% raw return vs. 3 cases of insurance policy

In the worst case, the policy holder can lose up to 96% of total return through fees and charges, best case the loss is around 40% of total return. The median case, i.e., what we believe the industry "standard" to be, the policyholder loses around two thirds of total return to fees and charges¹.

Footnote

1. We are not correcting for inflation. In the worst case, inflation creates a negative real return over 20 years – the worst possible result.