Standard Life announces increased payouts for policyholders

| February 2, 2007 | 0 Comments

UK life insurer Standard Life said on Thursday that stock market gains have made it possible to increase payouts on all types of policies this year. This was especially good news for mortgage endowment policy holders, which are expected to go up at a rate of 5.75 percent, per guidelines issued by the Financial Services Authority. Because Standard Life had a growth rate of 10.4 percent last year, shortfalls would be reduced.

Even with this development, however, up to 90 percent of those who hold mortgage endowment policies with the company are at risk of not being able to pay off their entire mortgage with proceeds from their policies. The other bad news was that Standard Life will not increase guarantees for their with-profit policy holders, saying that hiking bonuses would decrease its ability to fund growth. Instead, bonus rates will remain at last year’s level.

There was bad news for shareholders, as well, as Standard Life said that it would not extend the benefits of its surplus cash to them because when the company was first floated last summer, its with-profits fund was wholly-owned by members.

Besides mortgage endowment policy holders, there was also good news for holders of Standard Life pension plans. Payouts on pensions will be higher this year.

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