The thrill of winning a huge amount through prize-linked savings schemes is indeed hard to resist, but one of the things that constantly worry some investors is the security of their money.
Jacob Thomas, for instance, is troubled by the idea that in the event of a bondholder's death, the surviving family will have difficulty claiming the investment.
The retiree, 71, has recently asked National Bonds to allow him to nominate his wife, 65, as the sole owner of all his bonds. "But they don't allow it. Again, I sent them messages asking them to tell me what happens if the investor dies. I want to make sure my money will benefit my family because I worked hard for it. I need some kind of assurance," he says.
Strict process
National Bonds, in a statement to Gulf News, says their product is Sharia-compliant, and it follows strict processes in cases where the bondholder dies, in order to protect fund owners and their beneficiaries from any manipulation of funds.
The company says that Sharia law does not allow nomination of beneficiaries. However, in the event of death, the money can still be claimed by the rightful heirs, provided they produce the required documents. As to who should be the legal heir/s or how the money should be distributed, this will depend entirely on Sharia law. A Will or testament may not be honoured.
The required documents are a death certificate, ID copy of the deceased, "legal heir document", power of attorney for legal heir and legal heir's passport copy. A legal heir document, which can be obtained from the police, simply certifies that the claimants are related to the deceased.
"If one or more of these documents are unavailable, an order instructing National Bonds to issue the final redemption cheque to the court or any legal heir appointed by the court will also suffice."
Thomas is not at all pleased to learn that the heirs will have to go through a complicated process and produce "so many authenticated documents" to get any invested money of the deceased. Thomas says he also can't understand why investors don't have the right to decide and nominate who should claim their savings upon death.
"National Bonds is a Sharia-compliant product, and is therefore required to follow Sharia-compliant procedures…We strive to ensure that the process is as easy as possible without jeopardising the rights of our bondholders to a safe and secure ownership," the company said in a statement.
Premature withdrawal of accounts can be costly
Money placed in some lottery-linked savings schemes can be withdrawn prematurely, but customers may either have to pay certain fees or get lower returns.
At Mashreq, for instance, MashreqMillionaire certificates can be encashed after 90 days without charges. Should the holder wish to take his money back before 90 days, a pre-encashment fee of Dh25 per certificate will be levied.
At National Bonds, however, holders will have to wait 30 days from the date of issuance before they can redeem the value of their certificates. If they wish to end their account after that, no exit fees will be charged and profits will still be awarded.
"The longer you save, the higher rate of return you will get. Profits are distributed according to the number of bonds and for the time period the bonds were held during the related financial year."
"NBC will not forfeit your profits, however, you will receive a weighted profit amount that increases with the time these bonds are held at the end of the calendar year," the company said.
Have your say
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