With Profits.

With Profits Policies

A With Profits policy is a type of investment fund.

In comparison to other investment funds, With Profits funds give the investor the extra benefits of smoothing out the performance as well as possible bonuses.

How and where the contributions are to be invested is worth establishing if you are going to invest in a With Profits fund, but as with all investments in the stock market, it is important to stay invested for the long-term. That way they have time to build up and ‘smooth’ the short-term ups and downs. A With Profits fund could also be a way 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 being paid to you if the policy is held for the full term. 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.

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 With Profits fund manager 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 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.