Just over five years ago I took out a savings plan with Friends Provident International (FPI). It was for a short term as I was not sure how long I would remain in the UAE. The five years are up and it now seems likely I will stay for another two or three years before going back to the UK. I contacted my broker after being notified by the insurance company about the maturity and he told me I have to take the money from the plan and start a new one if I want to keep saving in this way. I won't be here for long and it appears I have to agree to a new term that is for more years than I intend to stay here. Is this really my only option? It seems a bit odd. DS, Abu Dhabi
Once a policyholder reaches the end of the initial term with the plan in question, a FPI Premier plan, a regular savings vehicle, they have a number of choices. You can take the maturity proceeds in full without penalty; you can stop paying premiums but leave the monies invested to take them at any time without penalty; or you can continue paying premiums with the facility to stop at any time and to take the proceeds whenever required without penalty. I have spoken with FPI to confirm the options. It is not in DS’s interest to start a new plan with a term that is longer than he will be in the UAE as he may have tax liabilities if he encashes this type of plan once he becomes a UK resident. His best option, considering his circumstances – and assuming he wants to continue with the premiums – is to keep the original plan in the current form but review the underlying investment funds and encash it before his return to the UK. He may also have other investment options that do not require a commitment to paying premiums for a further five years, including ones that have tax advantages once he is a UK resident again. I suggest he seeks advice from an independent financial adviser that has his interests to the fore rather than someone who is seeking to sell a plan, no matter the suitability, to obtain commission.
Keren Bobker is an independent financial adviser with Holborn Assets in Dubai, with over 20 years’ experience. Contact her at keren@holbornassets.com. Follow her on Twitter at @FinancialUAE.
The advice provided in our columns does not constitute legal advice and is provided for information only.
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