NOT all new savings plans these days are tracker bonds. Friends Provident is the latest life assurance company to revise its regular savings contract, allowing more flexibility of payment and better value encashment in limited circumstances.

AIB Bank has also set up a new savings account, designed to compete with An Post's Instalment Savings Plan, which offers regular savers interest rate bonuses if they commit themselves to at least a five-year saving term.

The first product, the Value Investment Plan from Friends Provident requires you to save a minimum £40 a month, for at least 10 years in order to fully absorb the setting up costs of the policy and to allow the investment fund sufficient time to produce real profits.

You have the choice of six funds Friends Provident's performance record has been very good - though the company recommends that the ordinary savers either choose the with-profits or unit-linked managed fund. After at least one year you can take a payment holiday with no penalties when you re-start the plan, and while this policy carries automatic life cover for non-smokers without any other pre-existing health condition, you should keep in mind that the investment value may be reduced during a payment holiday since units of value will be cashed in to maintain the life cover. Friends Provident will allow you to pay an extra amount for the life cover to avoid this unit encashment.

What makes this policy somewhat different from other conventional savings plans (i.e. those that apply the bulk of charges in the early years) is that it will, at the least, return all premiums, less any withdrawals, in the event of an emergency, defined as the death of a spouse or child, an inability to work for at least three months due to disability, or involuntary unemployment of at least three months.

The new AIB Savings Plan is a medium-term savings account which let you save any amount every month. Lodgments are set up to suit your payday or any bonuses but you can only make one withdrawal a year. The interest rate is 3 per cent, higher than standard deposit rates and bonuses apply on the interest earned each year, on condition that you stay within the saving terms and conditions.

After year one, 10 per cent of the interest earned is paid; 20 per cent of the interest is paid at the end of year two, 30 per cent of the interest earned is paid at the end of year three; 40 per cent of the interest earned is paid after year four and 50 per cent of interest earned is paid at the end of year five and every year thereafter. This works out at 4.5 per cent gross per annum. The low DIRT Special Savings Account option is available for this product.