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Julian Gibbs

GE Life, part of one of the biggest groups in the world, has teamed up with Abbey National Treasury Services to provide a structured product, income option plan 4, with a higher income than is available elsewhere.

There are two options. One pays 9 per cent annual income or 30 per cent growth and the other 7 per cent annual income or up to 24 per cent growth over a three-year term.

The 9 per cent option pays back capital in full provided the Eurostoxx 50 index is never more than 33.3 per cent below its initial level while the 7 per cent option pays back the capital if the index does not fall by more than 50 per cent.

Most forecasters expect European stockmarkets to gain over the next year although around 15 per cent believe it may go down a little.

The Eurostoxx 50 index is around 50 per cent off its high. European economies are beginning to recover from the recession. So, taking a three-year view, I believe it is most unlikely that the market will fall by as much as 33 per cent, let alone 50 per cent, from its current level.

It should be remembered that even during the Second World War markets rose from 1942 onwards and the same happened after the Gulf War. I believe that stockmarkets have already discounted the short-term effects of possible military action against Iraq and, as on other occasions after major disasters, the market is likely to recover.

I would choose the 9 per cent option but more conservative investors and the elderly might take the 7 per cent option. In today&#39s markets, this is the ideal plan for Pep transfers and Isas and the growth plan is a sensible investment for those wishing to use up their CGT allowance by making a direct investment. I recommend this plan to all but the most conservative investors.

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