With-profits investment

With-profits policies are designed for the medium to long term, ideally at least 5 to 10 years. We pool your money with that of other customers in one of our with-profits funds and that money is invested in a mixture of shares, bonds, property and money market investments.

Bonuses

The value of your with-profits investment can grow through the addition of yearly bonuses and, for most policies, there is the possibility of a 'final' bonus when your policy comes to an end. Bonuses are not guaranteed and bonus rates can go down as well as up. However, once added they can't be taken away. There is a risk that the value of your investment could go down as well as up and you may get back less than you invested.

With-profits investment returns are shared out as bonuses, of which there are two main types, regular (or annual) bonus and final (or terminal) bonus.

Regular bonuses can be added to your policy each year (or more often). Many with-profits policies guarantee a minimum payout on specified dates or events and the addition of regular bonuses increases this minimum level of payout.

A final bonus may be added when you decide to cash-in your policy or if you move out of with-profits by switching to another fund.

Market Value Reduction

A Market Value Reduction (MVR) can apply to some types of with-profits funds. An MVR is an adjustment factor that can be applied to those leaving a with-profits fund at times other than those specified in the terms and conditions, particularly following a large or sustained fall in the stock market or when market conditions mean that investment returns are lower than expected. This ensures that those leaving the fund do not receive more than their fair share of the underlying investment, and therefore enables us to treat with-profits customers fairly.

• To help you understand how we manage the with-profits fund in which you’re invested, we produce two types of guides. 
• These guides can be downloaded from our With-profits useful guides page.
• There are technical guides called the Principles and Practices of Financial Management (PPFM) and there are simplified, more reader-friendly versions. 

We're committed to treating our customers fairly at all times. To support this, we have a With-profits Committee which brings independent expertise and oversight, to ensure fairness is fully considered in our with-profits decision making.