Scottish Mutual International is introducing a guaranteed with-profits bond.
The single-premium unitised bond is available from April 17 and will initially be open only to residents of the Channel Islands and the Isle of Man. But Scottish Mutual says it will roll out the plan in the UK if there is enough demand from investors.
The life insurance version is a whole-life plan aimed at private investors and gives cover for up to 10 lives assured. The redemption bond targets corporate and institutional investors.
The bond guarantees a return of 117.5 per cent after eight years or at least 140 per cent after 15 years.
Minimum investment is £15,000 and maximum £2.5m. The annual bonus is set at 5.75 per cent.
A terminal bonus, currently applied at a rate of 1 per cent, may be added on death claims and withdrawals.
The bond has an establishment charge of 1.3 per cent of the value of the bond for the first five years and a distribution charge linked to the performance of the fund.
Sales director Tim Nelson says: “The extreme stockmarket volatility over the last year or so has made investors wary of taking risks with their hard-earned cash. We have built in an absolute cash guarantee to cancel out at least some of that risk.”