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13 June 2024

Money Talk


By Keith J Fernandez

The current financial crisis is a good time to consider saving in a long-term investment plan, says offshore insurer Friends Provident International, which has launched a single premium product with an option of early access and an annual loyalty bonus for long-term investors in the Middle East.

Matthew Waterfield, General Manager Middle East, told Emirates Business why he's pushing the plan.

Why do you say the financial crisis is a good time to start investing in a long-term plan? The uncertain situation means investors are cautious about where to put their money, but with stock markets at a low, now can be an ideal time to enter into a long-term investment plan. The relative low price on stocks currently means greater purchasing power for each dollar invested, so now is an optimum time to invest in funds that spread the risk.

What are the benefits of your new plan? The product offers Middle East investors a tax-efficient way to begin a long-term investment plan, receiving an annual loyalty bonus after three years with the option to access a large portion of their capital from the start, and a death benefit of 101 per cent of the surrender value.

What is the annual bonus and how is it paid? The bonus is paid as additional units into the plan on the third anniversary and on every anniversary after that. The bonuses are 0.50 per cent from year three to five, 0.75 per cent from year six to 10 and one per cent from year 11 onwards.

What funds does the plan invest in? Investors are given access to FPI's comprehensive mirror offering 200 diverse funds worldwide, to ensure sufficient choice and support to weather market turmoil. All funds are managed by expert fund managers. Funds typically invest in about 40 to 80 different companies and are considered less risky than investing in one company. Clients need to diversify into many assets and those with limited amounts to invest may benefit from choosing funds rather than individual shares. FPI's fund range is spread geographically by asset class and we also offer what are known as 'thematic' funds, which focus on specific asset classes, irrespective of constraints such as commodity, alternative energy, technology or healthcare-related securities.

What is the minimum investment required, what is the minimum term, what would be the payout at the end of that term given regular payments and no withdrawals?

The lump sum minimum premium investment of Summit is Dh137,500 ($37,500) – with additional contributions at a minimum of Dh55,000. There is no minimum term, it is not designed for early surrender. All payouts at the end of the plan depend on the investments made, any withdrawals and the length of the plan.

The Number


Total personal savings in America in December 2008, as compared to $299.1 billion (Dh1,100bn) in November, according to the US Commerce Department. Savings as a percentage of disposable personal income rose to 3.6 per cent in December compared to 2.8 per cent in November. Experts are concerned this new habit could worsen the financial crisis.