Be careful of complex product

A life insurer has introduced a single premium investment linked product with these features:

- 7 year lock in period
- 4.9% annual payout
- return of 100% principal at maturity
- additional insurance cover of 110% of invested amount
- initial fee of 5% to 6%, annual fee 1 to 1.2% pa

This looks attractive. Our expert analysed the product, and found the following features:

* The product feeds into a specialty fund managed by an investment bank through a special purpose vehicle.

* It targets high yearly return and full return of principal at maturity

* The annual payout and maturity value are not guaranteed - they depend on low default rate of "reference entities".

This appears to be a complex product, with risks that are quite difficult to understand (even to my expert).