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With-Profits Guarantees - How Do I Exercise A Guarantee?

If you find that you do have a guarantee on your with-profit fund then you may want to exercise it.

Of course the way you exercise a guarantee depends on the type of guarantee you have.

If you have a guarantee on bonuses on an endowment or pension for example then you may well want to find out what happens if you transfer or sell now as opposed to if you stay with the fund: will the guarantee protect your current value. If it doesn’t then you might want to see if you can identify the date when it will.

If you have a bond and there is an annual withdrawal guarantee then you may well want to find out how much you can take this year and each subsequent year without any penalty and then arrange for the required amount to be paid out.

What Guarantee?

Are Guarantees Important? And how can I benefit?

How do I find out if I have a guarantee?

How do I exercise a guarantee?

Some examples

Our list of companies and their guarantees

If you have a spot guarantee this will normally just apply on a particular date, in which case you need to identify that date (or sometimes there may be more than one date) and then make sure you are instructing the company to release the money on that date.

However you decide to exercise a guarantee we recommend three things are done:

Make sure the guarantee is exactly as you understand it. Don’t withdraw any money without being 100% certain of the terms of the guarantee. To protect yourself fully in this regard we suggest you use a regulated adviser to help you because they will have experience of this sort of situation and will ensure you are transacting this through a regulated process, which gives you certain protection.
Put any instruction in writing and make sure it is sent recorded delivery. This is crucial because it gives verification to the fact that the instruction has been sent and if via recorded delivery it will provide a signature at the recipients end. If you can make sure the instruction is sent well in advance.
Make it clear in this instruction that the guarantee is being exercised and make specific reference in the instruction to the guarantee. This means the Company will understand what you are doing and if they believe you are mistaken either to the legitimacy of the guarantee or its availability they will have to challenge it.

We thoroughly recommend that you obtain individual, tailored details of your plan or plans from a regulated adviser. Our affiliate IFAs are all regulated by the FSA. If you complete either the online enquiry or audit forms you will be contacted by an affiliate IFA.

The information on this website is to be viewed as general information and does not constitute advice. Views and opinions expressed are those of the individual contributors. Individuals reading the site should not rely on any of the information contained within the site in making any decisions. DMP Financial cannot be held responsible for any liability suffered by any individual as a result of information contained within the site. In the event that advice or help is required then independent advice should be sought from a regulated independent adviser.