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Norwich Union with-profits policyholders are to be handed an average £1,000 after the life company decided to redistribute surplus funds. Around 700,000 people will receive between £400 and £1,000 if they accept the offer, while a further 220,000 will get between £1,000 and £3,500.
Mark Hodges, chief executive of Norwich Union Life, said: "We believe that this offer represents good value for 99% of policyholders, and almost all of the cash payments will be tax-free. Most importantly, we recognise that policyholders have a choice and everyone will be entirely free to make their own decision on whether or not to accept the offer."
Eligible policyholders do not need to take any action now, and will receive a voting pack by the end of the year explaining the process in more detail. The payment is likely to be made next summer.
The payout follows an agreement between Norwich Union and the independent policyholder advocate, Clare Spottiswoode, that it is a fair offer. The agreement remains subject to a formal fairness review by the FSA, which will be presented to the High Court.
Ms Spottiswoode said: "I am delighted that we have a deal that is in the interests of the great majority of policyholders. There is a substantial amount of cash on offer. Eligible policyholders are also benefiting from a very large distribution of some £2.1bn related to the reattribution.
"This has been a long and difficult process. I have challenged many aspects of the rules of the with-profits industry to try to ensure that policyholders receive the best deal possible."
To qualify for the payout policyholders must have:
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An in-force policy invested in the CGNU Life or CULAC with-profits funds on 21 November 2006 (the date the Policyholder Advocate was appointed); and
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It is still in force on the day the potential reattribution takes place (currently expected to be summer 2009 at the earliest)
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It matured or terminated according to the terms of the contract between 21November 2006 and the reattribution date.
Further information is available from: https://www.life.norwich-union.com/fundtransfer/announce/home.do or the Policyholder Advocate's website: http://www.policyholderadvocate.org/
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