Norwich gives grand handout

A free share windfall averaging pounds 1,000 a head was announced last week for 3 million policyholders as part of Norwich Union's plans to join the stock market in June. But while the handout from the insurer is more generous than expected, several million other holders of, for example, car or household policies or personal equity plans will be entitled to nothing.

Nearly 2 million holders of "with-profits" policies - most endowments and many pension policies - will get a minimum of 300 shares, worth an estimated pounds 720. More than a million of these will receive additional shares, related to the current value of their policies. A small number of people with personal pension plans could end up with shares worth pounds 10,000 or more.

Holders of "non-profit" policies - such as term assurance, unit-linked policies and annuities - will get a fixed 150 shares, worth an estimated pounds 360. There are just over a million of these policyholders.

Only Norwich Union customers who hold life insurance, a pension plan or an annuity qualify for the free shares. Car, household and medical policies - as well as unit trusts and PEPs - do not qualify. Furthermore, individual members of group pension schemes run by Norwich Union miss out on the basic allocation of shares, although they should get any additional allocation.

A further exception is that where there are two named policyholders, only the first name on the policy will be entitled to the shares. Many thousands of divorced couples will still have joint policies, says the insurer, but only the first-named can receive the shares.

To qualify for the handout, you must have held a relevant policy on or before 1 October last year. If your policy matures before 18 April - the day of the vote on conversion - the entitlement will be lost. But for people whose policies mature, or who die between 2 October last year and 17 April, the insurer will pay a compensating bonus of up to 3 per cent of the payout.

Investors who bought Norwich Union policies on the traded endowment policy market before 2 October will acquire the right to free shares. But shares due on policies sold since then will go to the former, not present, holder.

The insurer also plans to offer discounts to policyholders to buy more shares.

Norwich Union has set up an information line on 0645 444818.