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&#39Worthwhile guarantee&#39 from Liverpool Victoria on endowment promise

Liverpool Victoria&#39s endowment promise appears to be a “worthwhile guarantee” because it is not pegged to the growth of the fund&#39s underlying investments, unlike rival life offices, according to Misys.

In a research bulletin sent out to Misys&#39 6,000 members, head of research Dale Tranter questions the validity of the endowment promises made by life offices Norwich Union, Standard Life, AMP and Liverpool Vic.

He concludes that Liverpool Vic&#39s promise is solid because it does not depend on underlying fund performance, unlike its rivals.

Misys says NU only covers policies which showed a shortfall as of December 31, 1999.

It will make up the difference between the performance of the fund and a 6 per cent annual return, meaning that there could still be a shortfall.

Standard will cover any shortfall as long as its managed fund returns 6 per cent a year.

Tranter says AMP has deep enough pockets to meet its 6 per cent promise but, given that it is not likely to pour more money into its three funds, NPI, London Life and Pearl, it is probable that the promise will be called upon.

Tranter says: “The Liverpool Victoria promise is not subject to achieving a certain growth rate on investments so it would appear to be a very worthwhile guarantee.”

Liverpool Victoria spokeswoman Kate Coney says: “We decided two years ago to offer an unconditional guarantee, the aim of which is to provide total peace of mind to our policyholders.”

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