The unexpected sometimes happens…!

• Life Assurances
  Life insurance is about providing some financial security for people who depend on you if you died. Advice on this subject is essential to ensure you buy the right amount of cover, with the right terms and conditions.
  
  There are two main types of life insurance: term insurance and whole-of-life insurance

• Term assurance
  This is the simplest and cheapest type of life insurance, and is known as term insurance because you choose how long you're covered for, say, 10, 15, or 20 years (the term).
  
  Term insurance only pays out if you die within the term you've agreed. If you live longer than the term, you get nothing. As a couple, you can also take out term cover in both your names, with the policy paying out if either of you die during the term.
  Whole of life policies
  
  Comparable in nature to term assurances, whole of life policies provide cover for the whole of the insured's life. These policies will cost you more, partly because they will pay out whenever the event (death) happens, but also because of the various charges that come with them. The cost also depends on your lifestyle: if you're a smoker and do a dangerous job, you'll pay more than a non-smoking office worker. Life cover also costs more for men because, on average, they don't live as long as women. Always compare what's covered by a policy, not just the price. Some might be cheaper than others, but they may not offer the same level of protection.
  
  Life Assurance plans can generally be set up under trust. This means that in the event of death, proceeds of the policy are paid directly to dependants of your choice. Provided a trust is set up properly, there may be benefits to doing this. However, using a trust may not be suitable for everyone and because of the complexities we recommend you seek financial and legal advice

• Investment
  Many policies provide not only protection but also investment. The principle here is that the premiums that are paid in respect of the policy are invested in order to benefit the policyholder or other beneficiary at a certain point in the future.

• Endowments
  These are a common form of investment policy. Monthly premiums are paid and when the term of the endowment expires a lump sum is paid out. The lump sum may be used to repay a mortgage for example. Most endowments have a protection element such that if the policyholder should die then the lump sum becomes payable.

• With profits
  The annual bonus rates on with profit policies in most cases are currently lower than the interest which could be earned by simply holding funds on deposit.

  Whilst the actual returns on the With Profits funds have been good in recent years, the inherent liabilities built up by over ambitious bonus declarations in the past means that such good returns, if maintained, will still not feed through to an increase in bonus rates until some catching up' has been done so that the fund may support its liabilities more comfortably.

• Shedding Light on With Profits( Download Shedding Light on With Profits)
  With-profit bonds enjoyed enormous popularity in the late 1990s. Lured by the attraction of smoothed returns and a seemingly low risk profile, investors poured billions into these contracts. However, the bear market of 2000-2003 brought investors' expectations crashing down. Bonuses dried up, market value adjustments (MVAs) were imposed and many funds became closed funds to new business.
  
  Since the publication of the Sandler review of long-term savings in July 2002, there have been numerous regulatory investigations and actions on with-profits. Perhaps the most significant was the introduction of the Individual Capital Adequacy Standards (ICAS) which changed the way insurers calculated their capital support and forced many of them to reduce their equity exposure at the bottom of the bear market. More recently the FSA has examined the issues affecting closed with-profit funds and has required companies to publish their Principles and Practices of Financial Management.
  
  While investors like the diversification promoted as an inherent benefit of with-profit products, they have become disillusioned by poor performance, changing investment policies, high fees and the opaque nature of the charges. Many with-profit bonds have become significantly different investment propositions from what investors purchased. In many cases they now offer very little long-term 'real' growth potential.
  
  However, Market Value Adjustments are starting to come down to more manageable levels. It may be time for many investors to take another look at their with-profit bonds and to ask whether they are still the most suitable products for their financial situation and investment objectives.
  
  As we have seen, many with-profit funds are now substantially different types of investment and may not be meeting investor’s original aims. The Financial Services Authority is keen for investors to check that their policies are still suitable for them. It also believes professional advice is vital.

If you require more information, contact us on 01276 488030 or fill in our Request Form.