Who Are
Friends Provident International?
Friends Provident is a renowned financial entity catering to expatriates, providing a range of savings, investment, and protection schemes throughout the regions of the United Arab Emirates and Asia. With a workforce of 500 professionals, the company operates from its offices situated in Dubai, Hong Kong, Singapore, and the Isle of Man.
***Some of these products may have commissions built directly into them. If you've been advised to consider a FPI policy reach out to us to explore if we can establish the policy at a lower cost.
Kevin's Review:
Friends Provident International (FPI) is one of the brands under the IFGL Group - they also own RL360 and Ardan International - and are a very reputable provider of investment and insurance based policies in the international market.
For Australians living in the Middle East, FPI has a true USP in that it's Reserve Plus policy is extremely tax efficient for anyone planning on moving (back) to Australia.
Furthermore, FPI offers some of the most internationally portable life insurance and critical illness policies available in the market today.
As with all insurance and/or investment based policies, they should be considered with care and you should consult with a professional financial adviser that specializes in the expat market.
Investment Bond:
International Reserve
The International Reserve Investment Bond offered by Friends Provident is a globally recognized financial product designed for expatriates, providing an opportunity for potential capital growth over the medium to long term (five years and beyond).
This investment option comprises two plan choices: the whole of life and capital redemption plans. The whole of life plan incorporates life cover, while the capital redemption plan ensures a guaranteed maturity value.
Regular withdrawals are possible with this investment, although it's important to note that such withdrawals will decrease the capital value. Opting for the capital redemption version means that withdrawals will also impact the guaranteed maturity value.
These plan structures, when utilized appropriately, can address the complex tax planning needs of clients. The Friends Provident Reserve Investment Bond empowers investors with the ability to defer and strategically plan for taxation. Holding assets in a tax-efficient environment, with no immediate tax on capital increases or income distributions until a designated time chosen by the investor and their financial adviser, serves as a valuable planning tool.
As for investment options, the Reserve Investment Bond offers two choices: collective investments and personalised assets. Investors gain access to global investment markets through unit trusts, investment trusts, open-ended investment companies, and the personalised assets version may include international equities, fixed interest securities, structured notes, and deposits.
Currency denomination options for the policy include US dollar, GB pound, Hong Kong dollar, Japanese yen, Swedish krona, or Euro.
The Reserve Investment Bond is suitable for customers with a lump sum to invest for a minimum of five years, seeking capital growth, regular withdrawals, or a combination of both. It is available to individuals aged 18 and above. If the plan involves lives assured, the minimum age is 2 years old, and at least one life assured must be 80 or younger.
The main risks associated with the Reserve Investment Bond lie in the performance of the investments. The plan's value can fluctuate, and there is a possibility of receiving less than the initial investment. Performance statistics are regularly updated, providing transparency for investors.
FPI ensures the value of the Friends Provident Reserve Investment Bond only when the capital redemption version is selected and the plan is cashed in at the conclusion of the 99-year fixed term.
Upon cashing in the plan, the actual return may be lower than initially illustrated. This could occur due to factors such as lower-than-expected investment returns, higher FPI charges than anticipated, or if withdrawals exceed the projected amounts.
Regarding charges, the Reserve Investment Bond offers two charging structures determined by the agreement between you and your adviser. Your adviser should furnish you with an illustration and personal charging structure. The two structures are:
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Establishment Charge Structure:
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A 1% per annum charge for 10 years, regardless of fund performance.
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Surrender costs of 10%, decreasing by 1% per year if encashed before the end of the 10-year establishment period.
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Annual Policy Charge Structure:
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An initial charge or an annual policy charge applies.
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An exit penalty equal to outstanding initial charges if cashed in during an initial charge period. No penalty if the initial charge is paid upfront.
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An administration charge is taken quarterly for the lifetime of the policy, with the amount depending on the currency used (e.g., £99.50 per quarter in GBP).
Accessing funds during an initial charge period incurs an early cash-in charge, equivalent to outstanding initial charges. No penalty is applicable if the upfront initial charge period is chosen.
In the event of death:
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Whole of Life Plan:
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If the plan is set up on a single life, it terminates upon death, and FPI pays a lump sum equal to 101% of the cash-in value.
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For plans on up to ten lives, the plan continues after the first death. FPI pays 101% of the cash-in value (or the cash-in value on the last survivor's death, if lower).
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Capital Redemption Plan:
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Continues until fully cashed in or matures after the 99-year term.
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After death, the plan may be assigned to beneficiaries or cashed in by personal representatives or trustees if written in trust. The cash-in value of the plan will be paid. The death benefit is not guaranteed and depends on the cash-in value at the time of death.
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Regular Savings Plan:
Premier Advance
Premier Advance is a unit-linked regular payment savings plan designed for medium to long-term investments, offering flexibility to expatriates. However, it is important to note that as of 2020, the plan has been discontinued for new investors in compliance with new insurance authority rules. This plan allows individuals to allocate funds regularly and caters to various financial needs. The suitability of the plan depends on factors such as age, tax planning, and personal circumstances, including the desired savings duration and amount. It's crucial to consider that the tax benefits associated with offshore international savings plans vary across countries, and the Premier Advance plan is no longer available for new investors in the UAE.
The plan can be taken out by individuals or on behalf of someone else, such as a partner or spouse, or on up to four joint lives. The age requirements stipulate that savers must be 18 or older but less than 70 years old at the plan's initiation, and at least one saver must be less than 76 years old when the plan is scheduled to end.
Payments to the plan can be made regularly, with the option to choose the plan length ranging from 5 to 25 years. Currency denomination options include US dollars, UK pounds, Euros, Hong Kong dollars, or UAE dirhams. Savers can make payments monthly, quarterly, half-yearly, or yearly, with flexibility to increase contributions. The minimum monthly savings vary based on premium payment frequency, with the lowest being the equivalent of US$300. Increases in payments need to be more than US$50 per month. Additional lump sums of US$3,000 or more can be added, with changes to premiums or lump sums potentially subject to a five-year term.
After the initial 18 months of the plan, savers have the option to suspend payments for up to 12 months or declare the plan as 'paid up,' with no further payments required. However, charges continue to be deducted, and the plan's value fluctuates based on the performance of the underlying funds.
The investment choice within the Friends Provident International Premier Advance Savings Plan encompasses a selection of 100 risk-rated funds covering major world markets and investment classes. The FPI website's funds section provides updated performance statistics on a monthly basis, daily updates on fund prices, and detailed fund fact sheets.
Savers have the flexibility to invest in up to 10 funds simultaneously in US dollars, British pounds, or euros. During the initial 18 months, considered the initial allocation period, premiums purchase initial units. Subsequently, premiums buy accumulation units. Investors can switch between investment funds at any point during the policy duration.
Regarding charges, the first 18 months of regular contributions, and any increases during this period, go towards purchasing initial units, incurring a penalty if withdrawn before the contract term concludes. Regular payments after the initial 18 months contribute to accumulation units. Initial units carry a 1.5% per quarter charge, with a monthly plan fee of $6. For regular payments, there is no additional entry cost, but lump sums incur a bid-offer spread of 7%. Withdrawals and fund switches are executed at the bid price.
Under the annual policy charge structure, a 1.2% annual fund administration charge is applied to the plan value. Additional charges, such as annual management charges and other fund expenses, are determined by the chosen underlying fund manager.
Access to cash before the savings term ends is possible, but significant early redemption charges may apply, potentially leading to the loss of bonus payments. Withdrawals or regular income payments are common alternatives to terminating the plan. In the event of a saver's death, the plan pays 1% on top of the cash-in value.
The Friends Provident International Premier Advance Savings Plan offers a loyalty bonus of 0.5% applied monthly after 10 years of full premium payment, contingent upon maintaining agreed-upon payments.