CGNU Policy Change (Ireland)

Anyone that has a CGNU (GA Life) Investment Bond, that is 10 years old, will recently have got a communication from Hibernian Aviva. This letter is basically telling you that, because it is the 10th anniversary of the policy, you can currently exit from the Bond without a Market Value Adjustment (MVA).

You can exit/surrender/encash a CGNU Investment Bond without an MVA (currently 14%) applying on the 10th anniversary and on each subsequent 5th anniversary. This condition would have formed part of the original policy document.

The letter from Hibernian Aviva goes on to say that '...if you decide to leave your money invested, you can reduce any MVA that may apply when you subsequently withdraw from the fund by up to a maximum of 14%'. This is very important. But, Hibernian Aviva have not communicated the mechanics of it to the very advisors you will rely on to direct you on what the correct course of action is right for you.

What this additional condition means is that, if you want to cash in your policy at any future date, and the MVA on this tranche of business stays at 14%, you can do so without penalty. The only situation that could arise that would mitigate against you would be where the MVA were increased. If this happened, and say it was increased to 20%, you would only pay 6% of an MVA on your future encashment value.

If you cash in your CGNU Investment Bond before the 1st of January you will not be eligible for the final installment of the Special Bonus that is due for 2010. The Reattribution Bonus will, however, be paid in any event.

I honestly do not know why this new 'condition' has been applied to these particular policies. Perhaps it has something to do with the whole Reattribution process?. Maybe, the company have decided that it is not cost effective to administer these policies from the UK any more and that they would prefer that this tranche of business left them for good?