Norwich Union recently announced that their unitised with profits bonus rates will remain at the current levels, as will their final maturity payouts. They also announced that following an upturn in markets the penalties they make for policyholders surrendering investments will fall. The average penalty for moving away from the with profits fund was 11%. This has now been reduced to 9%.
The only bad news to come from the announcement is in respect of conventional or traditional with profits policies. These are generally the older style with profits policies and they may suffer a penalty on final maturity of around 5%. This will technically reduce the terminal or final bonus allocated to the policy on maturity.
Our View
For a change from us - Well done NU! Norwich Union has proved that they continually monitor the financial markets and make any changes necessary – and not just to policyholders’ detriment.
By leaving bonus rates the same and reducing exit penalties, the company is showing their fairness in difficult times.
Despite the insurer having severe administration problems, we see no downside to the announcement and commend Norwich Union for their actions.
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