Articles - Annual bonus boosts guarantees on NFU with-profits policies

 Pensions and investments provider NFU Mutual has released the latest set of annual (reversionary) bonus rates for its with-profits policyholders, effective from 1st April 2013.

 The Mutual also announces its terminal bonus rates in January and July.

 - NFU Mutual confirms annual (reversionary) bonus rates for with-profits
 - All interim annual bonus rates for unitised plans in 2013 are either higher or the same as the 2012 rates
 - Adding annual bonus increases the value guaranteed at certain dates for with-profits products
 - Guarantees remain on all standard mortgage endowment policies
 - More than 19,000 with-profits pensions with Guaranteed Annuity Rates
 - Over 70,000 NFU Mutual with-profits policies
 - More than £2 billion invested in NFU Mutual's with-profits fund
 - Potential for growth attributed to strength of the fund and its high equity ratio
 - Latest independent Cazalet report scored NFU Mutual with-profits fund 10/10

 Helen Jones, commercial actuary at NFU Mutual, said: "These rates are another boost for our with-profits customers as they build the guarantees on their policies. In these uncertain economic times and against a backdrop of paltry interest rates, the guarantees available on with-profits products remain attractive to some investors. We have never failed to pay an annual bonus.

 "Some underlying with-profits funds are notably stronger than others. Our with-profits fund is recognised as one of the strongest with a high free asset ratio1. Our investment team have more flexibility to invest in a wide range of assets including company shares, property and bonds.

 "The strength of our fund allows us to invest for growth and our bonus rates clearly demonstrate that policyholders are benefiting from returns and guarantees."

 Guarantee for all standard mortgage endowment policyholders

 NFU Mutual still has its guarantee or statement of intent for all its standard mortgage endowment policyholders. All policies paid to full term will pay out at least enough to pay off the original mortgage linked to the policy.

 With-profits sales in 2012

 NFU Mutual saw an increase in with-profits sales during 2012. This reflects the value many investors place on guarantees and smoothing at a time of economic turbulence.

 Potential for growth

 The strength of NFU Mutual's fund means that it can continue to invest a large proportion of the fund in equities and property. This offers potential for higher returns than lower risk assets. NFU Mutual has a wide mix of assets in its with-profits fund. As at 31 December 2012, the asset shares backing NFU Mutual with-profits policies had 54% invested in UK and overseas equities and 19% in property. 

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