With-profit policies...still poor bonuses?

Friday, 15th February 2008 10:51 - by Resident IFA

There are millions of people in the UK who are invested in With-profits policies, mostly to protect and repay their mortgages in the form of Endowment policies. There has been a lot of conjecture in recent times as to why, after a good few years of stockmarket growth (until the last month!), the bonus rates have not reflected this. I can't speak for any of the companies involved, but it could well be a case of the recent growth bringing them near parity on previous losses. Remember, With-profits policies were designed to smooth out stockmarket fluctuations. I can't defend these great behemoth insurers, though, not when three of the major players have recently declared their bonuses and re-inforced the rainy outlook. Norwich Union reported year-on-year falls and that 90% of policies are unlikely to reach their target! This has to be balanced by their recent confirmation of their progress on re-attributing their 'Inherited estate', which will result in windfall payments for With-profits policyholders. Standard Life gave slightly better news as potential shortfalls were lessened, but still more than 50% of maturing policies will fall short of their intended target. Scottish Widows carried on the pattern of mixed news, providing the bright spot of none of their 2,400+ mortgage endowment policies maturing in the first half of this year will have shortfalls, but overall only 7% of those policies in-force can confidently be predicted to reach their targets. To finish off, some information on With-profits declaration dates coming soon: - Royal Liver: Any time now - Scottish Life: Late February - Legal & General: February 21st - Prudential: February 26th - AXA: First week of March - Royal London: First week of March - Scottish Equitable: March 12th - Co-operative Insurance: April 1st Have you suffered as a result of poor With-profits bonus rates? Is your mortgage unlikely to be repaid by your Endowment? All comments and opinions are welcomed...