Capital%20Plus

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Capital Plus
Solution to Address Your Financial Needs
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Agenda

• Need for investing
• Asset Allocation
• Financial Concepts of
• - Cost Averaging Effect
• - Cost of Delay
• ALICO/AIG Background
• Frequently used terms
• Features and Benefits of Capital Plus
• Investment Strategies
• Sales Aids
• Summary

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Need for Investing
for achieving your financial dreams
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Need for Investing

• Financial Goal
• Retirement
• Education of children
• Marriage of children
• General Savings
• Time Scale

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Principles of Investing
Why people invest (reasons and objectives)
The Wealth C. A. P.

• Wealth Creation
• Wealth Accumulation
• Wealth Protection

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Current Investment Trend Middle East
Market predominantly invests in Safe investments
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Investing in Safe Investments ?

• Inflationary Risks No Real Growth
• Your money is not really working for you
• Not enough money for your Dreams

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Ten Years Market Performance
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Stock Market Performance

• Between 2000 and 2002, US Stock Market fell for
  consecutive years
• Other consecutive falls
• 1929 - 1932, 1939 - 1941 and 1973 1974
• Always followed by a steep upswing

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Principles of Investing

• Deciding Factors
• Risk
• Return

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Risk Tolerance Spectrum
Asset Class
High Risk
High Return
Small Company Stocks International Stocks Large
Company Stocks Corporate Bonds Government
Bonds Cash Equivalents
Low Risk
Low Return
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Risk - Return Trade off

• Impacting Factors
• Personal Traits
• Time Horizon

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Risk - Return Trade off

• Personal Traits
• Income
• Exposure to Debt
• Saving Capabilities
• Threshold / Tolerance

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Risk - Return Trade off

• Time Horizon
• Age
• Time Span till the financial objective
• Other Selected date (as per objective)

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Risk Reduction

• Diversification
• Asset Allocation
• Volatility Span
• Cost Averaging

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Asset Allocation Time Frame
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Reduction of Risk Over time

• The Cost Averaging Effect

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Cost Averaging Effect

• Payment of a specified sum of money at regular
  intervals to purchase units or shares as part of
  a savings plan.
• By saving regularly into a unit-linked
  investment, investors can benefit from stock
  market fluctuations.
• No need to try and time the markets.

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Regular Savings - The Benefits of Averaging
Example 1 1,000 per annum invested over a 10
year period
340
340
340
360
350
380
420
470
540
Unit Price ()
670
1000
End of Years
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Regular Savings - The Benefits of Averaging
Example 2 1,000 per annum invested over a 10
year period
Unit Price ()
1000
1000
1430
1430
2000
2000
5000
2860
2860
4000
4000
End of Years
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Regular Savings - The Benefits of Averaging
Example 1
Example 2
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What is Cost of Delay?

• The difference (or the loss), in term of fund
  values, for delaying commencing savings.

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The Cost of Delay
- US600 per month at an assumed growth rate of
6 p.a. - Assumed retirement age 55.
Fund Value (in thousand)
Age commencing pension
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The Cost of Delay
- To achieve 1 million at retirement age 55. -
Assumed growth rate of 6 p.a.
Fund Value (in thousand)
Age Premium Required 35 2,061 pm x 20
years 40 3,352 pm x 15 years 45 6,024 pm x 10
years 50 14,370 pm x 5 years
Age commencing pension
Calculation are based on Future Gold
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Capital Plus

• Its a new exciting plan with the VUL benefit
  brought to you by Mashreqbank in co-ordination
  with ALICO
• Designed to be a market leader in the field of
• Savings Investments
• Fulfill the financial objectives and make dreams
  a reality

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Effective Investing with Capital Plus

• Identify Financial Goals
• Set Time Frame
• Apply Your Risk Tolerance
• Diversify / Suitable Asset Allocation
• Contribute Regularly
• Take Advantage of Cost Averaging
• Stay Focused on Your Goal

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American International Group (AIG)

• The Worlds Leading International Insurance and
  Financial Services Organization
• Over 130 Countries
• 2004 Assets - USD 800 billions
• 2004 Revenues - USD 98.61 billions
• In excess of 1.3 Trillion in-force Life
  Insurance
• Listed on NYSE, London, Paris, Switzerland and
  Tokyo

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• Among the largest International Life Insurance
  Companies in the world
• Leading insurer in more than 50 Countries
• High Ratings from Principal Rating Services (AA)

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Frequently used terms

• Premiums Contribution
• Account Value Value of the units in the funds
• Premium mode Annual, Semi annual, Qtly, monthly
  or single premium
• Single premium Investing only 1 premium as lump
  sum
• Policy Lapse Policy ceases its coverage benefits

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Frequently used terms

• Riders Supplementary insurance contracts that
  can be attached to Capital Plus plan
• Premium Term No. of years the premium needs to
  be paid according to the plan
• Maturity Policy anniversary when the benefit is
  paid out
• Target Premium Regular contribution (before
  rider premiums) chosen by policy holder subject
  to the minimum limit

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Frequently used terms

• Excess / Dump in/top ups Any amount invested
  in the plan above the target premium
• Surrender Exit from the plan before the plan
  maturity
• Cash Surrender Value Account Value Surrender
  charges Processing fees - any outstanding loans
• Underwriting An integral process in a policy
  issue which access the risk of an application and
  classifies the issue of the policy or rejects the
  application

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Capital Plus Features and Benefits
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Capital Plus

• An unit linked investment savings plan for
• Wealth Creation and Accumulation, e.gs
• Educational fee planning
• Retirement planning
• Wedding planning
• Mortgage down payment
• General savings
• Rainy days.
• Goals Protection

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Capital Plus Features and Benefits

• Eligibility Age between 1 month and 85 years
• Maturity at age 100
• No medical underwriting for Capital Plus
• Payment Term 1 to 20 years
• Minimum Premium as low as US200pm, depending
  on payment term
• Payment Mode monthly, quarterly, semi-annual
  or annually
• Both regular and single premiums

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Minimum premium and term
Term Monthly Annual Premium in
Single Premium 12000
2-4 years 800 9600
5-7 years 600 7200
8 years - above 200 2400
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Capital Plus Features and Benefits

• Tailor made plan client chooses the premium
  payment term, decides the contribution into the
  plan
• Flexibility in taking benefits as and when needed
• Partial withdrawal US25 processing fee
• Policy Loan loan amount in GRA, one loan per
  year, interest rate applies
• Available after 1st year.
• Minimum amount US500, up to 80 of net surrender
  values
• Premium holidays allowed, with no back payment

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Capital Plus Features and Benefits

• One Stop Shop Concept
• Access to a maximum of 16 different investment
  funds at any one time, with as low as US200pm,
  vs buying direct
• Consolidated valuation statements
• One contact for different fund management groups
  and different transactions
• A multiple of 10 allocation in each fund
• Fund Switching facility
• Between funds and different fund mgt groups
• Maximize and capture any gains made, market
  change or opportunity
• Change according to clients life stages and
  needs
• Free 4 transfers per annum, US25 per each
  additional transfer
• 2 spread

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Capital Plus Features and Benefits

• Redirection of Future Premium
• Existing investment intact not forced to
  realize any loss, if any
• Capitalize future market potential and
  opportunities
• Free accidental death benefit 50 of account
  value, subject to a maximum of US200k (GCC
  Residents/Nationals)
• Free accidental death benefit 10 of account
  value, subject to a maximum of US5k (Non GCC
  residents/Nationals)
• Access to expert investment group simply, quickly
  and at low cost
• 3 investment strategies to suit different risk
  profiles and objectives Aggressive, Balanced
  and Conservative

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Investment Strategies
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Investment Strategy - Aggressive

• Vanguard Global Stock Index fund
• Vanguard Europe Stock Index fund
• Vanguard US Stock Index fund
• AIG Global Equity fund
• AIG American Equity Trust fund
• Templeton Global Smaller Companies Fund
• Templeton China Fund
• Templeton Latin America fund
• Templeton Emerging Markets fund
• Templeton BRIC fund
• Franklin India Fund

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Investment Strategy - Conservative

• Vanguard US Government Bond Index fund
• Templeton Bond Fund
• AIG Global Bond fund
• ALICO Guaranteed Return Account

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Capital Plus - Features and Benefits

• Goals Protection
• optional insurance cover to protect the financial
  goals
• Level Term Life Insurance (LTR)
• Monthly Income to family for a specified period
  of time (IBR)
• Recovery Benefit Plan (RBP) or Critical Care
  (CI)
• Waiver of premium till maturity of plan in case
  of death or permanent total disability of
  insured (WP, FPA)
• Spouse pension fixed for 20 years after death of
  the insured (SPR)

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Features, Explanations Benefits
Features Explanations Benefits
Low minimum premium With as little as US200 per month, you can start a savings plan You can have access to 16 different investment funds, covering all major markets and sectors, which generally require a much higher premium per fund to invest into.
Low minimum additional single premium (dump in) With as little as US200, you can put in any single premium at any one time. With as low as US200, you can invest into the plan at any one time to take advantage of the market as and when you see fit. Normally, most investment houses require a higher single minimum premium.
Good range of issue age Can be from 1 month to 85 years old To give you better access and flexibility in planning your life from the young age to elderly.
Different premium payment mode Premium can be made monthly, quarterly, half yearly or yearly. To give you flexibility in arranging your finance.
Dollar cost averaging effect Capitalizes on market fluctuations Benefit even when the markets are in the downturn due to regular contribution and increases the overall a/c performance
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Features, Explanations Benefits
Features Explanations Benefits
Fund switching (Transfers) You can switch in and out of any one fund at any time ( 4 free transfers in a year w/o processing fee) To maximize your gain by anticipating any changes in the market and also preserve the profits gained
Free Accidental Death Benefit Additional 50 of the a/c value, subject to a max of 200k, on accidental death. A free additional lump sum benefit to relieve the financial burden of your family should the unfortunate event happen.
Partial/ Full Withdrawal Allow you take out the money from the plan partially or in total To meet the financial expectations planned or unforeseen
Policy Loan Allow you borrow money against your own plan To give you an alternative should you need to meet certain financial needs in case of emergency
Reinstatement / Paid-up / Premium holiday Allow premium payment be suspended for a period of time When reinstated, no back payment is required.
Redirection of premium Change the allocation or change the choice of funds itself of the future premiums into the funds Avoids realization of the loss usually incurred when he transfers his investment into another fund due to poor market performance
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Features, Explanations Benefits
Features Explanations Benefits
Pension/ Annuity Option Choice of using the lump sum account value at the chosen pension age to provide an annuity/pension guaranteed for the next 20 years or for life thereafter if the insured is alive Helps to plan for good retired life at the desired time in life and to financially secure the beneficiary with a regular income upto 20 years
One Stop Shop 5 different investment funds covering different geographical areas and sectors facilitating diversification of investment Easy to manage the investment diversification. Single statement one point of contact
Optional Insurance Benefits various options available like LTR, SPR, FPA, RBP, WP Offers protection against securing financial objectives
Local administration The team is based in Sharjah. Everything is handled locally, from processing to issuing policy. Better turn around time and hence more business
Documentation at the time of applying 3 page simple application form signed , Passport copy with valid visa page, Illustration signed Much simpler than other VUL plan, less documentation
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Summary

• Financial Planning Concept
• Dollar Cost Averaging
• Cost of Delay
• Features and Benefits of Capital Plus
• Competitive product features and benefits
• A good vehicle for financial planning
• One stop shop for investment and insurance needs
• Investment Strategies
• Local and regional support from ALICO
• Experienced in bancassurance

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