Scottish Life has made cuts to with profits bonus rates for the second time in six months. The cuts have been made to terminal bonus rates and will mean lower payouts of between 5% and 10% at maturity.
A plus point to these cuts is that Market Value Reduction penalties have been reduced. This is better news for people wanting to surrender or cash in their endowments.
The MVA penalty has been 12.5% but this has now been reduced to 7.5%. Scottish Life attributed this cut to improvements in the investment markets and the changes to terminal bonuses.
Our View:
The changes to maturity payouts will penalise people that have held their policies to maturity. But, those people surrendering and leaving the with profits fund will benefit. Markets have recovered slightly but there is still a long way to go.
If you are concerned about your mortgage endowment, contact us for guidance or advice.
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