Aviva guarantees with profits policies

Aviva has launched a money-back guarantee for investors in with-profits funds who hold their policies for five years or longer.

The deal is open to new investors who will be guaranteed to recoup their initial investment if they move out of the fund at any point after five years. Customers will lose the guarantee if they surrender their policy within the first five years.

Aviva is charging an extra 0.7 per cent per year for the first five years for the guarantee, available from November 30.

“By taking advantage
of the with-profits guarantee, customers can benefit from potential increases in property and shares, with the peace of mind of a money-back guarantee, providing they invest for at least five years,” Aviva said.

Independent financial advisers described the guarantee as “novel” but said the 0.7 per cent charge would be a drag on performance. “I also would want to know whether the guarantee will lead to more cautious management of the fund,” said Brian Dennehy of Dennehy Weller.

Others were not convinced that the guarantee was a better option for cautious investors.

“If investors want certainty of capital, it would make more sense to get exposure to low-risk assets where, while they have a lower yield, the capital is secure and can be accessed if needed,” said Adrian Lowcock of Bestinvest.