Friends Provident boosts its investment bond offering

Friends Provident has made more changes to its Wealth Solutions bond in a further attempt to salvage its investment bond proposition that last year produced margins close to zero.

The insurer has added a multi-income option to the bond, meaning investors can invest in up to five income distribution funds at a time out of a choice of 13. Investors do not have to choose funds that have the same distribution frequencies.

Mel Rees, investment proposition manager at Friends Provident, said that Friends had introduced the latest changes ‘as part of our commitment to meeting current needs – one of which is to allow the investor more flexibility and choice’.

Friends announced in February that it was giving advisers three options for commission payments for the Wealth Solutions Bond which it launched in September last year.

Friends stated in its recent strategic review that it expected the overall 2007 margin for insurance bonds to be close to zero, ‘with the profitable, recently-introduced products not yet contributing significantly’.

In the review Friends reported high lapse rates for its investment portfolio bond, with 35% of with-profits products having been surrendered between the fifth and sixth policy anniversaries, while 25% of unit-linked investment portfolio bonds were surrendered. Simon Clamp, Friends Provident’s managing director for UK sales and marketing, said the insurer was working to keep lapse rates lower.