Article date: 4 February 2005
Norwich Union’s offshore business, NorwichUnion International, is to introduce a permanent version of itsfifth anniversary money back guarantee on the Norwich UnionInternational Core Funds Bond and Norwich Union InternationalWith-Profit Bond.
The guarantee will be available via three newfunds, known as the with-profit guarantee funds, from 7 February2005. It will replace the current fifth anniversary money backguarantee special offer on the standard with-profit funds, whichends on 6 February. From this date, there will be no fifthanniversary guarantee on the with-profit funds.
The with-profit guarantee funds will beidentical to the with-profit funds in all aspects except theguarantee and the management charge, which will be an extra 0.5%p.a. for the first five years of investment. It is not possible tomake investments in or switch into the with-profit guarantee fundsafter the start date of the bond.
The feature is in addition to the tenthanniversary money back guarantee and guarantees to return thepolicyholder’s original investment into the with-profitguarantee fund in their bond currency, regardless of investmentconditions, provided they cash-in their investment on, or withintwo weeks after, the fifth policy anniversary.
Paul Sherlin, marketing director at NorwichUnion International, said: "With-Profits remains a hugely importantmarket for Norwich Union International and our sales grew verystrongly again in 2004. We are therefore delighted to now introducethese new with-profit guarantee funds, which include a fifthanniversary money back guarantee. When you add this to the recentannouncement that we are maintaining our bonus levels for newbusiness in 2005, we believe we are providing advisers with a veryattractive and competitive customer offering."
The fifth anniversary money back guarantee doesnot apply if any withdrawals from the bond exceed 7.5% of thesingle payment in any policy year or if any withdrawals from thewith-profit guarantee fund exceed 7.5% of the single payment in thefund in any policy year.
If any money, not exceeding the above limits, istaken out of the fund before the fifth anniversary through regularwithdrawals, one-off withdrawals or switches into other funds, thenthe amount guaranteed will be reduced in proportion to the numberof units cancelled. Any units cancelled to meet charges will notreduce the guarantee.
A market value reduction may apply if money istaken out of the with-profit or with-profit guarantee funds. Thiswould reduce the quoted value of the amount taken out. This is mostlikely to happen following a large or prolonged fall in the stockmarkets or after a period where investment returns are regularlybelow the level normally expected.
Although an MVR could apply on, or within twoweeks after, the fifth anniversary, the effect of the fifthanniversary money back guarantee is that investors will not getback less than their original payment in the with-profit guaranteefunds if they remain in the fund for the whole five years and thenwithdraw on the fifth anniversary. In any other circumstances, theinvestor may get back less than they invested.
Norwich Union International Mike Gogan00 353 1 802 8415
Financial Dynamics Christine Wood 020 7269 7253
Notes to editors
About the fifth anniversary money back guarantee
- The fifth anniversary money back guarantee will apply toinvestments held continuously from outset in the with-profitguarantee funds for five years that are withdrawn on, or withintwo weeks after, the fifth anniversary money back guarantee.
- The fifth anniversary money back guarantee does not apply to thewith-profit funds or to units added after the start date of thebond. It is not possible to make investments in the with-profitguarantee funds after the start date of the bond.
About the Norwich Union International Core Funds Bond
- The Norwich Union International Core Funds Bond offers acarefully selected choice of funds from the most popular fundsectors, all within one bond. Its minimum investment is £10,000,€15,000 or $15,000 and investors can choose to put theirmoney in a selection of funds including with-profits, equity,property, bonds and cash, which are run by Norwich Union andother industry-renowned fund managers.
- Capital Redemption version available to suit corporate andtrustee investors.
- Offers a select choice of internal and external unit linkedand with-profit funds.
- Investors have the option to create their own risk portfolioor use Investment Management Selection (IMS) Fund of Funds as analternative.
About the Norwich Union InternationalWith-Profit Bond
- The Norwich Union International With-Profit Bond offersinvestment into three with-profit funds (Sterling, Euro and USDollar) and three with-profit guarantee funds (Sterling, Euro andUS Dollar). Its minimum investment is £10,000, €15,000 or$15,000.
Both the Norwich Union International CoreFunds and With-Profit Bonds:
- offer valuable guarantees. The with-profit guarantee fundsoffer money back guarantees on the fifth and tenth policyanniversaries. For investments into the with-profit funds thereis a tenth anniversary money back guarantee.
- with-profit and with-profit guarantee funds are‘reinsured’ into Norwich Union’s With-ProfitFund meaning that investors will enjoy all the benefits of awell-established With-Profit Fund from the UK’s largestinsurer.
- The only tax on income and capital gains that offshore lifeinsurance funds may suffer is some unrecoverable withholding taxthat most countries deduct from dividend and interest payments.Investors may also have to pay income tax when money is withdrawnfrom the bond, but will have control over the timing of anywithdrawals and thus any potential income tax liability.Withholding taxes vary from country to country and according tothe type of investment.