A with-profits policy is a type of investment fund.
Policies that are with-profits give the insured the extra benefit of a possible bonus that is a share of the profits from the funds that the premiums have been invested in.
How and where the premiums are to be invested is worth establishing if you are going to invest in a with-profits product, such as single premium insurance bonds for example. But as with all long-term investments in the stock market or in interest bearing instruments it is important to stay with them for the long term. That way they have time to build up and "smooth" the short term ups and downs in rates of return. The with-profits endowment policy is also a means of regular long-term saving and has the potential for a good return, but there is no guarantee of the final (maturity) value of the policy.
Some policies may also benefit from terminal bonuses if they are held for their full term. When choosing insurance products for investment it is important to be aware of what charges, fees or commissions may be attached to them and when profits and bonuses are added to the policies. Some, for example, will be heavily weighted with charges at the beginning of their policy life.
Once any bonuses have been added, they cannot normally be taken away. Growth and bonuses cannot be usually guaranteed in advance but any bonuses will be added to your sum insured, bringing a possible investment return over the years of your life insurance policy.
With-profits bonds are usually another way of investing in with-profits funds by paying a single insurance premium. Drawing down income from a with-profits bond can be an option, though obviously any income drawn down will deplete the original capital if the amount withdrawn exceeds the capital growth of the bond.
A Market Value Adjustment (MVA) is a way for the insurer to make sure that the amount of money paid out to an investor is a fair reflection of that investor's share of the with-profits fund, and any growth which has been achieved on the fund. The MVA is used to protect the remaining policyholders with units in that fund.
The adjustment is made via a penalty that may be applied if a customer takes units out of a with-profit fund other than on a pre-agreed date, to take account of investment market conditions at the time.
The operation of the MVA may mean that the value of your investment, if encashed early, could be less than the amount invested.
A MARKET VALUE ADJUSTMENT MIGHT APPLY ON ENCASHMENT. THE VALUE OF THIS POLICY DEPENDS ON HOW MUCH PROFIT THE COMPANY/FUND MAKES AND HOW THEY DECIDED TO DISTRIBUTE THAT PROFIT.
THE VALUE OF INVESTMENTS AND THE INCOME FROM THEM MAY GO DOWN. YOU MAY NOT GET BACK THE ORIGINAL AMOUNT INVESTED.
Read less
Value | Move | % |
FTSE 100 | ||
6588.53 | 105.1 ![]() |
1.621 ![]() |
FTSE 250 | ||
21221.46 | 311.092 ![]() |
1.488 ![]() |
FTSE 350 | ||
3781.7 | 59.43 ![]() |
1.597 ![]() |
FTSE All Shares | ||
3761.45 | 59.05 ![]() |
1.595 ![]() |
Dow Jones | ||
31535.51 | 603.141 ![]() |
1.95 ![]() |
Nasdaq | ||
13588.828 | 396.482 ![]() |
3.005 ![]() |
Wealth, just like your health, must be carefully preserved. Your assets need to be protected against the potential threats of erosion by taxation, the effects of inflation and investment risks. ...
Read moreAll businesses are exposed to risks in their day-to-day operations. Without business insurance cover to provide protection against some of these risks, businesses would find it difficult... ...
Read moreIf you're over the age of 55, equity release offers you a way to use the value of your home to raise money. There is a range of equity release schemes available on the market offered by ...
Read moreProfessional Financial Planning is the process which aims to help you realise your ambitions - whatever they may be. As professional financial advisers we can help you make informed decisions ... ...
Read moreMortgages are loans which are intended to help buyers purchase residential and commercial property. When an individual takes out a loan, the lender charges interest: the same is true of a mortgage. ...
Read moreThe main purpose of Life Assurance is to provide money for those people who may depend on you financially, in the event that something should happen to you. ...
Read moreHealth Insurance is probably one of the most important types of insurance you can own. Without it, an illness or accident can have serious long-term financial implications for you and your family. ...
Read moreThis is an area of financial planning that is often overlooked. Traditionally, we have our buildings and contents insurance with our mortgage lenders, which may be uncompetitive ... ...
Read moreWhen you retire you still need food and shelter as an absolute minimum, but of course you will want to maintain the lifestyle to which you have become accustomed ... ...
Read moreWhen someone talks about savings and saving money, it could be referring to a piggy bank or a high interest deposit account. Savings are effectively cash or cash instruments ... ...
Read moreMost of us face being taxed on our income, our capital gains, and in some circumstances the value of our estate when we die. Taxation can be very complicated and the rules, reliefs and allowances ... ...
Read moreCONTACT US
Parklands Financial Advisers
52 Pinbush Road
Lowestoft
Suffolk
NR33 7NQ
T: 01502 531 633
Email Us
The guidance provided within this website is subject to the uk regulatory regime and is therefore primarily targeted at consumers based in the UK.
Parklands Financial Advisers is Authorised and Regulated by the Financial Conduct Authority.
Parklands Financial Advisers is entered on the Financial Services Register (www.fca.org.uk/register) under reference: 710277.
A summary of our internal complaints handling procedures for the reasonable and prompt handling of complaints is available on request and if you cannot settle your complaint with us, you may be entitled to refer it to the Financial Ombudsman Service at www.financial-ombudsman.org.uk or by contacting them on 0800 023 4567.
Registered Address: Glebe House, Toad Row, Henstead, Beccles, Suffolk, NR34 7LG.
Registered in England & Wales under reference: 09625599.
© Copyright 2021 - Adviser Pro - All Rights Reserved
Design and Developed by Adviser Pro © 2021