Standard Life cuts payouts on endowments
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Your support makes all the difference.Standard Life, one of the biggest insurance companies in the UK, has cut the payouts on both 10- and 25-year endowment policies which mature this year. A policy taken out by a male aged 30 next birthday and paying pounds 50 a month for 10 years will pay out pounds 10,033 when it matures in 1997, compared with pounds 10,185 for a similar policy which matured in 1996.
A policy taken out 25 years ago on the same basis will pay out pounds 102,673, down from the pounds 104,671 paid out last year.
The reduced payouts broadly follow a pattern set by other leading companies including Norwich Union, which cut 10-year payouts by 4.9 per cent but increased 25-year payouts by 0.7 per cent. Commercial Union has cut both payouts by 5.2 and 4 per cent respectively.
So far only Royal Life has been able to increase both payouts, by 0.5 per cent and 0.6 per cent.
Reduced payouts are the result of reductions in the terminal bonuses added to the maturing policies. The reversionary bonuses added each year to Standard Life's endowment and whole-of-life policies are unchanged at 3.25 per cent on the basic sum assured and 4.5 per cent on bonuses previously declared.
These rates are the same as last year. Annual growth rates on unitised with-profits policies have been reduced from 6.5 to 6 per cent.
Falling maturity values have caused widespread concern, although they are a result of the downturn in inflation in recent years, which is affecting 10- and 15-year policies much more than 25-year policies all of which made substantial gains as a direct result of inflation during the Seventies.
Excluding inflation, Standard Life policies have been growing by 9.9 per cent before allowing for inflation and 6.2 per cent a year after inflation over the last 10 years, and 13.2 per cent a year before inflation and 6.5 per cent after inflation over 25 years the company said yesterday.
Two more companies produced new business figures for 1996 yesterday confirming that the combination of a strong stock market and the constant urgings of politicians, insurance salesmen and the media have had some impact on reluctant investors.
Royal Sun Alliance reported a 113 per cent leap in new single-premium business last year, and a 34 per cent rise in total business. Royal Sun Alliance BAT's subsidiary Allied Dunbar announced an increase of 19 per cent in total new business premiums, a 50 per cent jump in term assurance policies and 19 per cent in critical illness policies.
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