CAPITAL INVESTMENT BOND PLAN

Transcription

1 The Financial Services Authority is the independent financial services regulator. They require us, LICI UK, to give you this important information to help you decide whether our CAPITAL INVESTEMENT BOND Plan is right for you. You should read this document carefully so that you understand what you are buying, and then keep it in a safe place for future reference. This Key features Document is for a UK savings plan and is for use by residents ordinarily resident in the UK, Channel Islands or the Isle of Man. Helping you decide! This Key Features Document will give you information on the main features, benefits and risks of the CAPITAL INVESTEMENT BOND Plan. You should read this document carefully so that you understand what you are buying, and keep it in a safe place for future reference. A personal illustration will be provided upon request to show you how much you may get back in the future and outline any associated costs and charges. Your Key Features document and personal illustration should be read together so that you gain a clear understanding of the product, its features benefits and risks together with any associated costs and charges. If you require any further information about the LICI UK CAPITAL INVESTEMENT BOND Plan, or if you have any questions or queries, please speak to your Financial Consultant in the first instance. Alternatively you can phone the LICI UK helpline on (freephone). 1 CIB Version # 2 1/22/2012

2 This document does not contain the full Terms & Conditions of the Plan. These can be found in the Policy Document. It should be read in conjunction with your personal illustration, which shows what the Plan may cost. If you are unsure as to whether the Plan is suitable for your needs please contact your Financial Adviser. Its aims To increase the value of a lump sum investment through a choice of funds. To allow partial or full withdrawals. To allow automatic, regular withdrawals paid direct to your bank or building society account. To defer any liability to higher rate tax on withdrawals from the Bond. Your commitment: You can invest a single lump sum of at least 5,000, or 2,000 if a reinvestment, or if you already have a Capital Investment Bond. Once the initial investment is made, there is no further commitment. Risk factors The Bond should be regarded as a medium to long term investment. Should you elect to take regular withdrawals, this will usually deplete the capital invested. The value of your Bond, and any income from it, depends on the price of units in the fund(s) and this can go down as well as up and you may get back less than you paid in; there is no guaranteed value. If you exercise your right to cancel your Bond you will receive back either the amount you invested or the value of your fund, whichever is lower. Warning: If you cash in your Bond you may get back less than you paid in, particularly in the early years. 2 CIB Version # 2 1/22/2012

3 If you are in any doubt as to whether this Bond is suitable for your needs please contact your Financial consultant. An Example: It is based on a male aged 30 next birth day investing a lump sum of 10,000, over 10 years. If the investment grew at 4% a year, you would get back 12,700. If the investment grew at 6% a year, you would get back 15,400. If the investment grew at 8% a year, you would get back 18,500 These figures are only examples and are not guaranteed - they are not minimum or maximum amounts. What you will get back depends on how your investment grows and on the tax treatment of the investment. The above stated growth rates are set by the FSA and whilst all firms use these for illustration purposes the projected returns will vary as these figures include deductions for firm specific charges. Investments made in Defensive Managed fund and Bond fund are likely to achieve lower returns than the ones shown above. Please refer to your client specific illustration for full details. You could get back more or less than this. All firms use the same rates of growth for projections but their charges vary. Do not forget that inflation would reduce what you could buy in the future with the amounts shown. 3 CIB Version # 2 1/22/2012

4 Questions and Answers What is the Capital Investment Bond? Although primarily an investment, the Bond is a unit linked whole life assurance. It will provide a lump sum of 101% of the value of your investment, if you die during the investment period, as at the date of death. Your investment buys units in the fund(s) of your choice. All net income from underlying investments is reinvested to boost the fund value. Partial or full withdrawals can be taken at any time to provide a regular income stream, but this will deplete the capital invested. The Bond is available to anyone aged 18 and over and should be regarded as a medium to long term investment. There is no minimum or maximum term. It can be assigned and/or placed in a trust. Can my spouse/civil partner and I have a joint Bond? No, the Bond can only be written on a single life basis. What happens if I die? If you die while the Bond is in place, we will return the value of your investment together with an additional 1%, totaling a return of 101% of your investment value as at the date of death. How do I make my investment? The minimum investment is 5,000 but this is reduced to 2,000 if you already have a Capital Investment Bond or if you are reinvesting the maturity proceeds of an LICI savings plan. Further investments can be made only by starting another Bond. Units are allocated at the next valuation following receipt of your cheque. 4 CIB Version # 2 1/22/2012

5 Where is my money invested? You can choose to invest in any of the following funds: The Balanced Managed Fund The LICI Balanced Managed Fund aims to achieve medium to long term growth. Investment will be in a wide range of assets including equities, gilts, fixed interest securities and cash, both in the UK and overseas. A large share of the fund (roughly 70%) will be invested in equities. The Defensive Managed Fund. The LICI Defensive Managed Fund aims to provide a combination of income and longer term capital growth. Investments will be in bonds, equities, cash and other related investments, a large share of the investments (roughly 60%) going in to fixed interest securities such as gilts and corporate bonds. The Bond Fund. The LICI Bond Fund aims to provide high income with scope for capital growth by investing in fixed interest securities such as gilts, corporate bonds and cash. Who manages the funds? William De Broe Private Investment Management Ltd manages the fund on behalf of LICI UK. How is the valuation done? The funds will be valued on each business day for the purposes of determining a single price at which units may be issued or redeemed. A business day is defined as a day on which the London Stock Exchange is open. The valuation point will be 12 noon. Unit dealing will be on a forward basis. Fund prices will be posted on the website and will be available from the Helpline. Fund prices may be published in selected newspaper(s). 5 CIB Version # 2 1/22/2012

6 Can I switch funds?? You will be able to switch between funds at any time without charge although LICI reserves the right to make changes in future. The minimum amount you can switch is 500 and this is subject to a minimum remaining fund value of 500 unless the fund is switched in its entirety. The request to switch will result in part or all of your existing fund unit holdings being sold and units purchased in your new fund holding(s). All fund choices are made at your own risk, so it is important that you seek appropriate advice. What about charges? There is no initial charge before your money is invested. A management charge of 1.5% per annum is made on the fund before the unit price is calculated. If you cash in part or the whole of your Bond within the first five years, an early encashment charge will apply as per the details given in the table below. Where however the automatic withdrawal option has been selected the charge will only apply if you take withdrawals in excess of 5% of your investment in any one policy year. LICI UK reserves the right to alter the charges. EARLY ENCASHMENT CHARGES Years Bond in force Encashment charge as a % of amount cashed in Less than 1 year 5% 1 to less than 2 years 4% 2 to less than 3 years 3% 3 to less than 4 years 2% 4 to less than 5 years 1% 5 years and above 0% 6 CIB Version # 2 1/22/2012

7 When can I take my money out? At any time either in whole or in part though the Bond is a medium to long term investment and not suitable if you are likely to cash it in after a short period. The amount payable will be calculated on the price at the next valuation following receipt of your written request. Withdrawals must be for at least 500 and the amount remaining in any one fund must not be less than 500, otherwise partial encashment will not be available. If you cash in part or whole of your Bond within the first five years, an early encashment charge will apply. No early encashment charge will apply once you have held your investment for 5 years. LICI UK reserves the right to alter the charges. Can I take regular withdrawals from the Bond? Yes. Simply complete the automatic withdrawal form or let us know subsequently in writing. The minimum regular withdrawal is 50. Regular automatic withdrawals will cease if the value of the Bond falls below 500. Please note that these automatic withdrawals are taken from the value of your Bond and are not income from the fund. Withdrawals can be made monthly, quarterly, half yearly or yearly depending on the amount you invest. It is not advisable to start making withdrawals until the Bond has achieved some initial growth, therefore the automatic withdrawal option will not be available for the first twelve months. Withdrawals of more than 5% in any one policy year give rise to a chargeable event. What is the tax position? There is no personal liability to basic rate tax. 7 CIB Version # 2 1/22/2012

8 Tax is paid on income and capital gains from within the Bond equivalent to basic rate tax. Death or withdrawals from the Bond gives rise to a chargeable event and you may incur a tax liability. A liability to higher rate tax may arise as follows: a) If you withdraw more than 5% of your initial investment per policy year. b) This is a cumulative allowance and any unused part can be carried forward subject to the total not exceeding 100% of your initial investment. c) Any tax liability is calculated on the amount withdrawn in excess of your accumulated 5% allowances. d) On final encashment, if the value of the Bond, added to any withdrawals taken, exceeds the initial investment made less any previous gains. e) In the event of your death, if the value of your Bond immediately before death, excluding the additional death benefit payable, added to any withdrawals taken, exceeds the initial investment made, less any previous gains. How will I know how well my Bond is doing? On each anniversary of the commencement date of your Bond we will send you a statement. 8 CIB Version # 2 1/22/2012

9 Tables Based on an example of a lump sum investment of 10,000 over 10 years 100% in Balanced Managed Fund) THE EARLY YEARS WARNING if you cash in during the early years you could get back less than you have paid in. The last two columns assume that investments will grow at 6% a year At end of year Total paid in to date ( ) Total Actual Deductions to date ( ) Effect of Deductions to Date What you might get back ( ) 1 10, , , , , , , , , ,090 12,200 The later years 10 10,000 1,830 2,490 15,400 What are the deductions for? The deductions include the cost of life cover, remuneration, expenses, charges, any surrender penalties and other adjustments. The last line in the table shows that over the term shown, the effect of total deductions could amount to 2,490. Putting it another way, leaving out the cost of life cover this would have the same effect as bringing investment growth from 6% a year down to 4.42% a year. How much will the advice cost? Your adviser will give you details about the cost. The amount will depend on the size of the investment. It will be paid for out of the deductions. Can I change my mind? After your proposal is accepted, you will receive a notice of your legal right to cancel. You then have 30 days from receipt in which you can 9 CIB Version # 2 1/22/2012

10 change your mind. If you wish to cancel, you must return the Cancellation Notice to the address given on the form and you will receive back in full any contributions you have made. If we do not receive a Cancellation Notice your plan will continue. FURTHER INFORMATION This Key Features Document only gives a summary of the terms and conditions of your investment. For full terms and conditions that apply to this investment you should read the LICI Capital Investment Bond Policy Document. Can I transfer the Bond to India? No, there is no facility to transfer the Bond. Can I keep my Bond in the UK if I move to India It depends on the foreign exchange regulations in India and the UK at the time of transfer. Currently an Indian national under certain circumstances can keep the Bond in the UK. Complaints If you are not satisfied with what we do for you, please let us know by writing to LICI UK, 10th Floor, York House, Wembley, Middlesex HA9 0PX. If you prefer, you can telephone our Customer Helpline on (Freephone) or us at customer.service@liciuk.com. We aim to deal promptly and fairly with all complaints. If you are not happy with the outcome you may be able to refer to the Financial Ombudsman Service, South Quay Plaza, 183 Marsh Wall, London E14 9SR about this if you need it. Copies of 10 CIB Version # 2 1/22/2012

11 our complaints handling procedures are available on request. This will not affect your legal rights. Compensation We are covered by the Financial Services Compensation Scheme. You may be entitled to compensation from the scheme if we cannot meet our obligations. This depends on the type of business and the circumstances of the claim. Most types of investment business are covered for maximum compensation of 50,000. You can find more about the Financial Services Compensation Scheme, including eligibility to claim by visiting its website or calling them on Law If any legal dispute arises the Law of England and Wales will apply. This document is based on our understanding of current law and HM Revenue and Customs practice. Full details are contained in the policy document which is the legally binding contract between you and the Life Insurance Corporation of India. The Life Insurance Corporation of India is authorized and regulated by the Financial Services Authority. Language The English language will be used in all documents and future correspondence. How to contact us? If you have any queries please call our Customer Services Helpline on (free phone). Our lines are open from 9 am to 5 pm Monday to Friday. Alternatively you can us at customer.service@liciuk.com. 11 CIB Version # 2 1/22/2012

12 We would like to make you aware that calls may be recorded and monitored. Office Address: LICIUK, 10th Floor, York House, Empire Way, Wembley, Middlesex HA9 0PX. The Life Insurance Corporation of India is authorized and regulated by the Financial Services Authority (FSA), entered on the FSA Register, registration number We only provide information and advice on the Protection, Pension, Savings and Investment products and services from our own range and those of selected third party providers. 12 CIB Version # 2 1/22/2012