Caution urged on returns

LIFE insurance companies have been told to use more cautious assumptions about likely returns when providing quotations for investment products.

Under the Financial Services Act companies must use standard assumptions about investment returns to ensure consumers are not given an exaggerated picture of likely returns.

The life insurance regulator, Lautro, has revised the figures because of falling investment returns, both on deposits and shares. From 1 November, companies must stick to upper and lower rates of 12 per cent and 6 per cent respectively for tax-exempt products such as pensions and personal equity plans and

5-10 per cent for other products.

Previously they could assume 8.5-13 per cent on tax-exempt schemes and 7-10.5 per cent on others.