Product Profile of the Month
March 2010
Product Provider - Friends Provident International Limited
Product Name - Reserve Advance
Single or Regular Premium - Single
Target Audience - UK-based investors
Jurisdiction - Isle of Man
Website link - www.fpinternational.com
What is Reserve Advance?
Reserve Advance is a unit linked lump sum offshore investment bond. Aimed at UK-based clients with a minimum sum to invest of £50,000 (GBP) who are seeking capital growth, a regular income or a combination of both - Reserve Advance is the natural choice.
The bond can be written as a life assurance policy with multiple lives assured, and a death benefit payable on a last survivor basis or as a capital redemption policy with no lives assured and no death benefit, but with a guaranteed minimum maturity value.
Product features and benefits
Our recent Reserve Advance product enhancements give your clients MORE;
- Flexibility - a choice of four charging structures, including a new annual policy charge (APC) version.
- Choice - choose from the collective investments version or personalised assets, a wide range of trusts, virtually unlimited fund choice and easy access to capital.
- Benefits - availability of fund rebates, fund-specific quotes, discounted fund terms and the bond can be issued with up to a maximum of 100 identical policies (or segments). Each policy segment is a policy in its own right and can, in certain circumstances, make Reserve Advance more flexible to administer and in a number of jurisdictions make the policy more tax efficient. The minimum investment per policy segment is £5,000 or currency equivalent.
A choice of investments for your clients
Reserve Advance can be issued as a Collective Investment version, which gives you access to a wide range of collective investment schemes, authorised investment trusts and cash deposits.
If your client becomes a non-UK resident they can also have the Personalised Investment version of Reserve Advance, which, in addition to a full range of collective investment schemes, authorised investment trusts and cash deposits, also includes a personal choice of investments including equities and fixed interest securities.
Investments can be switched at any time (subject to any notice period on the underlying funds and dealing charges). Alternatively, the client can appoint their own Fund Advisor or Discretionary Fund Manager (DFM). The DFM is subject to a minimum contribution level for this service, and the approval of Friends Provident International Limited. The fund adviser fee can be paid from your clients’ policy, which, if they are UK resident, will form part of their annual withdrawal allowance.
Reserve Advance is a medium to long-term investment and should be held for at least 5 years.
Getting access to your clients’ investment
Withdrawals can be taken from a policy at any time either as an ad hoc payment or as a regular amount (minimum total plan value may apply).
Current UK tax legislation enables a client to take a withdrawal of up to 5% of their initial investment each year for 20 years, without an immediate income tax liability. If the allowance is not used in any year it will roll over to the next year on a cumulative basis.
Your client can fully surrender their policy (or policy segments) at any time. There may be a surrender penalty if the policy is surrendered in the early years.
The Isle of Man – Security for your clients
The minimum and maximum age limits for investment are 18 and 89 respectively. The Collective Investment Bond is designed for international investors.
The Isle of Man has enjoyed 25 years of unbroken economic growth, averaging around 7% per annum over the last 10 years.
The Island has the highest Sovereign Credit Rating ‘AAA’ from Standard and Poor’s and ‘Aaa’ from Moody’s.
The Isle of Man is a self-governing dependent territory of the British Crown. Tynwald (the Manx Government) is the oldest unbroken Parliament in the world. Over 1,000 years of continuous government demonstrates the Island’s political stability.
Policyholder Protection
To ensure the protection of policyholders’ interests, the Isle of Man regulators (the Insurance and Pensions Authority) has put in place a number of statutory measures, which can be categorised as follows:
Ring fencing of assets – the Insurance Act 2008 requires insurers to keep premiums received in a special “long-term business fund,” which can only be used to meet the claims and long-term liabilities of policyholders. The Act also requires the insurer to hold funds in excess of its long-term liabilities, and submit independently audited annual solvency reports to the regulator.
A policyholder compensation fund – in the event that the above measures fail, and the insurer is unable to meet its liabilities, policyholders will be protected by the Life Assurance (Compensation of Policyholders) Regulations 1991. The compensation scheme offers policyholders up to 90% of the insurer’s liability. The compensation scheme applies to policyholders irrespective of where they reside.
For further information please visit Friends Provident Internationals website – www.fpinternational.com or contact your Regional Sales Consultant for more details.
