Who are Friends Provident International?
Friends Provident International (FPI) is a well-known financial brand for expats, offering savings, investment and protection plans across the United Arab Emirates and Asia. The company has 500 staff across offices in Dubai, Hong Kong, Singapore and the Isle of Man.
What is it…?
Premier Advance is a unit-linked regular payment savings plan designed to be held as a medium to long-term investment that is now discontinued to new investors under the new insurance authority rules in 2020. It offered several flexible options for expats who want to set aside money at regular intervals. Whether the plan is right for you depends on your age, tax planning and other personal circumstances, such as how long and how much you wish to save. The tax benefits of an offshore international savings plan are not the same in every country. The plan is no longer available to the new investors in the UAE.
Who can take out the plan?
As the savings plan has an element of life protection, you can set up the plan yourself, on someone else, such as a partner or spouse or on up to four joint lives. Savers must be aged 18 or over, but less than 70 years old at the start of the plan, while one saver must be less than 76 years old when the plan is due to end.
How to make payments to the plan and various options?
Savers can choose the plan length — from 5 to 25 years. At set-up, savers can choose the plan’s currency denomination from US dollars, UK pounds, Euros, Hong Kong dollars or UAE dirhams. If payments are to be made regularly, they can be made monthly, quarterly, half-yearly or yearly. The plan has flexibility to increase payments. Monthly minimum savings depend on the frequency of paying premiums, but the least amount a saver can pay monthly is the equivalent of US$300. Payment increases must be more than US$50 a month. Additional lump sums can be paid in as long as they are US$3,000 or more. Changing premiums or making lump sums may be subject to a five-year term.
After the first 18 months of the savings plan, payments can be suspended for up to 12 months or the plan can be ‘paid up’ without the need for any further payments. Charges are still taken and the value of the plan will vary as funds rise and fall.
What is the investment choice?
There are 100 risk-rated funds covering all the major world markets and investment classes. The funds section of FPI’s website contains performance statistics which are updated monthly, fund prices which are updated daily and fund fact sheets on each fund.
Savers can invest in up to 10 funds at any one time in US dollars, British pounds or euros. As a unit-linked fund, the first 18 months are considered the initial allocation. After that, the premiums buy accumulation units. Investors can switch investment funds at any time during the duration of the policy.
What are the charges for the Savings Plan?
The first 18 months of your regular contributions plus the first 18 months of any increase are used to purchase initial units. These have a penalty if you withdraw them before the end of your contract term. All regular payments to the Friends Provident International savings plan after the first 18 months are used to purchase accumulation units.
Initial units have a charge of 1.5% per quarter and there is a plan fee of $6 per month. There is no additional entry cost for regular payments. However lump sums will be subject to a bid-offer spread of 7%, that is they are deposited at the offer price and immediately drop down to the bid price. All withdrawals and switches between funds are done at the bid price.
Annual policy charge structure — an annual fund administration charge of 1.2% of the plan value. Other charges = annual management charges and other fund expenses are imposed by the underlying fund manager and the amount depends on which fund is chosen.
Other charges may arise for savers paying their premiums by credit card and lump sum payments. Payment by credit card into the FPI Premier Advance will result in a charge of between 1% and 1.95% of each payment additional cost.
All withdrawals and switches between funds are done at the bid price. Annual policy charge structure — an annual fund administration charge of 1.2% of the plan value.
What about access to my money?
If having access to your cash before the savings term ends is important, then this is where the Friends Provident International Premier Advance Savings Plan has some flexibility. Although the plan will likely not have a cash-in value until you have paid at least 18 months’ worth of payments, savers can ultimately cash in the plan when they wish — but significant early redemption charges may apply and savers are likely to lose their bonus payments. Rather than end the plan, many savers take money from their plans as one-off withdrawals or regular income payments. If a saver dies, the plan pays 1% on top of the cash-in value on death.
Are there any discounts or bonuses available?
The Friends Provident International Premier Advance Savings Plan has a loyalty bonus applied after 10 years of full premium payment. The bonus is 0.5% and is applied monthly from the 10th anniversary of set-up forward as long as the agreed payments are maintained.
About Mike Coady
Mike Coady is an expat expert based in Dubai and is on hand to help with all of the above and more.
Mike is an award-winning money coach and industry leader in the financial sector.
Qualified to UK Financial Conduct Authority (FCA) standards, a member of the Chartered Insurance Institute, a Fellow of the Institute of Sales Management (FISM), a Fellow of the Institute of Directors (FIoD), and featured as a highly qualified Financial Adviser in Which Financial Adviser.
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