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With-profits
With-profits policies
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bond can be an option, though obviously any income drawn down will deplete the original capital if the amount withdrawn exceeds the capital growth of the bond.
Market Value Adjustments (MVA) - what are they and how do they affect With-Profit investments?
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.
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About Us
Based in Melton Mowbray, Mill Lane Asset Management is a trading style of Active Financial Partners Limited, which is part of the Harwood Wealth Management Group Ltd. The Group is based in Waterlooville, Hampshire and currently has more than 80 financial advisers who through regional offices provide financial planning and wealth management advice to retail investment clients, as well as...
Read MoreMelton Mowbray Office
Mill Lane Asset Management
20 Norman Way
Melton Mowbray
Leicestershire
LE13 1JE
Phone : 01664 483124
Email : Enquiries@MillLane.com
The guidance provided within this website is subject to the UK regulatory regime and is therefore primarily targeted at consumers based in the UK.
Mill Lane Asset Management is a trading style of Active Financial Partners Limited which is authorised and regulated by the Financial Conduct Authority.
Registered in England No.04266233 ---- Registered & Head Office: 5 Lancer House, Hussar Court, Westside View, Waterlooville, Hampshire PO7 7SE.
Active Financial Partners Limited is entered on the Financial Services Register (www.fca.org.uk/register) under reference 301860.