Endowment Investment TV

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The general view of investing in Endowment Policy



Endowment Policy

The endowment policy is a type of life insurance policy that designed to pay a lump sum at a certain time or if the person dies an endowment policy may mature at ten, fifteen, or twenty years and some of these policies may also provide money if there is a serious illness. Endowment policies are generally the traditional with-profits or unit-linked and with unitised with-profits funds.


Surrender Value and Adjusted Market Value

Endowments can sometimes be chased early or surrendered early and the policy holder receives the amount of the surrender value determined by the insurance company. How much is received is going to depend on how long the endowment policy has been in effect and the amount paid in to it. Under bad investment conditions the encashment or surrender value may be reduced by a market value adjuster to squeeze out some cash during the time when investment conditions are not good and this means the investor will received only the surrender value minus the adjusted market value.

Aviva cuts with-profits bonus rates


10 February 2012 12:53 pm | By Tom Selby
Article from Money Marketing

Aviva has cut bonus rates for with-profits investors as the provider battles volatile investment markets.

Aviva has reduced the annual bonus rate for unitised with-profits policies in the ex-CGNU fund and unitised life policies in the ex-NULAP fund by 0.25 per cent.

There has also been a 0.5 per cent reduction in the regular bonus rate for conventional endowment policies in the ex-CGNU and ex-CU funds.

Final bonus rates for unitised with-profits policies, which were increased in July, have been reduced by 6 per cent on average due to falls in investment markets.

The total bonus rate on the with-profit income fund was reduced by between 0.25 per cent and 1.5 per cent depending on the year of investment.

The provider says reductions in bonus rates was necessary to “reflect future economic expectations and prudent management of the fund”.

Aviva propositions director Phil Willcock says: “Our research tells us that investment volatility is a significant concern for our customers.

“Thanks to the strength of our with-profits funds, we have been able to protect our customers from the full effects of the severe market volatility we have seen throughout 2011.”

Annual bonus rates for new business are now 2.5 per cent for bonds, 3 per cent for pensions and 2.75 per cent for stakeholder pensions.

Hargreaves Lansdown pension investment manager Laith Khalaf says annual bonuses are likely to remain muted for the foreseeable future.

He says: “Once promised they are guaranteed, which creates a liability that the insurance company has to meet come what may, and normally leads to less investment freedom for the fund. Insurance companies are therefore reluctant to offer decent size annual bonuses and are more likely to offer any rewards to investors through terminal bonuses.

“Many with-profits funds have also become more cautiously invested over the years. The Aviva and Friends Life funds are only around 50 per cent invested in equities. While this may suit more conservative investors or those approaching retirement long term investors seeking growth should probably have more equity exposure.”


Article from Money Marketing