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NU gives pledge after payouts plummet

Norwich Union is introducing a protected guarantee for new investors in its with-profits fund in a bid to revive public confidence in the asset class.

Some advisers, while welcoming the news, say it comes too late for existing policyhol- der who were hit with further bad news in last week’s bonus announcements.

NU revealed that maturity values on its 25-year with-profits mortgage endowment policies fell from 54,130 to 48,889 on its Culac fund and from 47,087 to 45,338 on its Nulap fund year on year, based on a 29-year-old male non-smoker paying premiums of 50 a month.

The protected guarantee offers a minimum return of the investment plus inflation if held for five years.

There is no extra charge but early exit penalties could apply if the money is withdrawn early.

The guarantee coincides with a 4m eight-week NU advertising campaign to support advisers and urge consumers to seek financial adv- ice where appropriate.

Commercial director Mike Kirsch says: “Confidence in with-profits is still low. Customers are heavily orientated towards guarantees. The hardest thing is to repair the name with-profits but, as advisers and customers realise the potential of this guarantee, they will realise what a unique solution with-profits can be.”

Life Direct director Kieran Platt says: “Obviously, the guarantee is a good thing but contrast that with the many policyholders with Norwich Union and other insurance companies who have invested their money for the last five years and who will not get back the money that they put in originally.”

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