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NU International targets with-profits at niche market

Norwich Union International has established a with-profits bond especially for the clients of IFAs based in the Isle of Man and the Channel Islands.

The Norwich Union International with-profits bond is available to investors with at least £10,000 and it currently offers an annual bonus rate of 4.75 per cent. The bond invests in Norwich Union’s onshore with-profits fund.

Despite the negative publicity with-profit bonds have been receiving recently, Norwich Union International’s market research indicates a demand for with-profits from a small number of offshore IFAs.

Offshore with-profits bonds are more expensive than onshore products for UK-based clients. They tend to be of interest to expatriates and people who are working in the UK but who intend to retire abroad. There is a niche market for offshore with-profit bonds and few providers offer them, so this product could extend choice.

The current annual bonus rate is higher at 4.75 per cent than the 4 per cent offered by Friends Provident International and both bonds charge a penalty during the first five years for investors who withdraw more than 7.5 per cent a year.

The Norwich Union bond has a higher penalty in the first year of 9.9 per cent, compared with the 8.5 per cent Friends Provident International charges, but the penalties are the same for both bonds during years two to five. However, Norwich Union International does not apply this charge where at least 20 per cent of the original capital remains invested in the bond, which may make it more attractive to some investors.

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