Pinnacle Insurance and Scottish Life International are to roll out guaranteed onshore and offshore b...
Pinnacle Insurance and Scottish Life International are to roll out guaranteed onshore and offshore bonds respectively, writes Jane Wallace.
The Pinnacle Premier Bond 4 will be linked to the FTSE 100 and yield 8% per year over four years. There is a growth option of 35% on maturity and a monthly income option of 0.64%.
The bond will be launched at the end of April. Commission for IFAs is 2%. This is just below the standard rate for this kind of product, but, as with previous products, Pinnacle has chosen to slim down commission in order to give a higher returns to consumers.
The income and growth options on the bond are guaranteed but return of original capital depends on the performance of the FTSE 100 index. If the index rises from its starting level on maturity of the bond, then investors will receive all their growth or income and original capital invested.
If however the index has fallen from its start level, then original capital is eroded on a one for one basis with the percentage loss of the index. So if the index dropped by 5%, investors would receive all of their growth or income but only 95% of their original capital.
There is a 40% floor to losses in the product, so that investors cannot lose more than 60% of their original capital. The offshore Scottish Life International Income & Growth Bonus Bond 2 offers 10.55% per year over three years and is linked to the Eurostoxx 50 index. There is also a growth option of 33.1%.
Capital is protected so long as the index does not fall by more than 27% on maturity of the bond. However, if the index does fall by that amount, all income and growth is clawed back, along with a reduction in original capital on a one-to-one basis with the percentage loss in the index.
Therefore if the index lost 30%, investors would receive only 97% of their original capital back and no returns.
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