Features and benefits of a Summit Bond
Keep in mind these features and benefits can be eclipsed by the charges discussed above.
FPI says you can access up to 90% of your premiums from the outset. We say, actually, you may not be able to, as you have to keep an account minimum. And, always keep in mind that the establishment charges will be based on the premium you deposit. So, if you withdraw funds, your charges will not reduce. They will remain based on the original premium.
FPI says there is no initial charge, 100% of your premium is invested – but of course, thereafter it is exposed to the charges as described above.
You can currently switch between funds fee free, but FPI reserves the right to alter this at any time.
Other features include being able to invest in a choice of currencies, 101% death benefit, potential for tax-free investing, and that annual bonus we mentioned.
With regards to the bonus, if you’ve withdrawn funds, this will reduce the value of your plan, and as your bonus is calculated based on the value of your plan, your bonus will be less.
Number of complete years since the commencement date of your Summit Bond
|
Loyalty bonus as % of value
|
3 – 5
|
0.5
|
6 – 10
|
0.75
|
11+
|
1
|
One of the core features of a wrapper, like the Summit Bond, is that once it is set up, there is no extra paperwork (other than dealing instructions) required to change investments or add new ones. This is commonly sold as a benefit by financial salespeople.
Another perceived benefit is that it can be easier for your personal representatives to manage your estate when you die if all your main investments are under a single bond.
The integral life insurance element is not designed to provide real protection. All FPI promises is that they will pay out 1% more than what you deposited - or the market value of the investments upon death - whichever is highest.
So, if the life insurance element is virtually worthless, why is it added? It’s added for these 2 reasons:
1. It brings the investment under the protection of the Isle of Man government. The advantage of this is that if Friends Provident International Ltd were unable to meet their obligations to you, then the government should guarantee 90% of the value of your investment at that time.
2. It can provide tax advantages in some jurisdictions…however, this benefit is massively over-sold, especially to those in low or no tax jurisdictions like the UAE, where being able to defer tax with a bond is simply unnecessary.