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GE Life links to blue chips

GE Life has unveiled the seventh tranche of its high income and growth plan, which is linked to 50 European blue chip companies through the Eurostoxx 50 over a three-year term.

The plan is available as a direct investment and is also available as an Isa or Pep transfer option, making the returns tax-free. It provides investors with a choice of annual income of 10 per cent, monthly income of 0.78 per cent and a growth option of 33 per cent after three years.

The Eurostoxx 50 index consists of companies in a range of sectors, including Univer, Nokia and Philips Elextronics. Investors are guaranteed the return of their original capital unless the index falls by more than 20 per cent during the term without recovering to at least its starting level. If it falls by more than 20 per cent without recovering by the end of the term, investors&#39 capital will be eroded.

If the index falls by between 21 and 30 per cent and the final index level is lower than the starting level, capital will be reduced by 1 per cent for each 1 per cent fall in the index.

If the index falls by more than 30 per cent and does not equal the starting level by the end of the term, there is a 2 per cent reduction for each 1 per cent drop in the index for income options. Investors with the growth option will lose 2.66 per cent of their investment for every 1 per cent fall.

The bond sits at the higher-risk end of the scale of structured products. Although it offers a high level of income and growth, it is complicated and there is a risk of capital erosion at high rate for larger falls in the index.

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Scott Dolfi

Born: New York stateAge: 39Lives: Notting Hill with his wife and three childrenEducation: BS Engineering and Management, Clarkson University, New York. MS Industrial and Management Engineering Rensselaer Polytechnic InstituteCareer: 1985-89 TRW Inc project manager on management associates programme. 1989-1997 GE Commercial Real Estate Financing & Services asset manager then managing director of quality. 1997-99 GE […]

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