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Legal & General cuts life policy bonus rates and maturity payouts

Legal & General has cut its annual bonus rates by up to 25 per cent on life policies and maturity payouts by more than 15 per cent.

Annual bonuses on life policies fall to 1.5 per cent from 2 per cent in 2000 on the sum assured and to 2.75 per cent from 3.5 per cent on existing bonuses.

A 25-year endowment policy for a male aged 29 paying £50 a month will pay out £73,566 compared with £86,895 last year,a decrease of 15.3 per cent.

The running yield – a yearly bonus made up of an annual bonus and any contractual bonuses – on a unitised single premium with-profits income bond is unchanged from 2000 at 6.5 per cent. For a unitised single-premium with-profits growth bond the running yield is down to 4.5 per cent from 5 per cent.

For regular-premium unitised with-profits personal pension, the RY is 5 per cent, down from 6 per cent on 2000.

L&G says its bonus declarations take account of current investment conditions and maintain fairness between generations and classes of policyholders.

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