Endowment and investment-linked insurance: what they are and what they charge

An endowment policy promises to return a sum at the end of a term if you are still alive, and investment-linked insurance mixes life cover with a component that invests part of what you pay. In both cases a sizeable portion of every contribution goes to covering the cost of the insurance and the fees, not to being invested.

The result is familiar: low net returns, penalties for leaving early, and twenty or thirty-year terms where the insurer is betting you will get tired. CONDUSEF, Mexico's financial consumer authority, publishes complaints every year about products sold as investments that were protection.

The simple rule so you do not get lost: if you cannot see what your money is invested in and what you are charged each month, separately, it is not an investment — it is a policy wearing make-up. A real investment can be audited line by line.