Exit With Profits
Exit With Profits
Exit With Profits
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With-Profits Guarantees - What Guarantee?

  
If you have a with-profits plan you may well have a guarantee attached. Don’t be surprised if you don’t know whether you do or not – this is quite normal. Most plans have some form of guarantee applying, how valuable this is or what it is worth are separate points. The first point is: do you have a plan with a guarantee attached or even better, guarantees (i.e. more than one)?

With-profit plans are normally either:
  • An endowment
  • A with-profit bond
  • A pension
And the type and nature of guarantees applying to each may be different. Some plans (e.g. endowments and pensions) may have guarantees that apply on the final termination date of the plan; they may have guaranteed minimum bonuses or guarantees on death.
Other types (most notably with-profit bonds) may have spot guarantees, as well as some or all of the above.

Spot guarantees in particular are potentially highly valuable, as they allow an early surrender of a plan on a pre-determined date, with a guarantee applying that the investor’s value can not be reduced by the Insurance Company. On any other date the value may be reduced.

With falling asset values, many with-profit funds are struggling and they are raising their penalties. Quite frankly we believe that penalties are only going to get worse and are going to be in place for many years. If a guarantee allows an investor to free their money with no penalty this must be an outstanding opportunity.

However guarantees are often buried away in the small print of plans. This means they can sometimes be there for investors to use, but because they don’t know about them, they don’t get to use them.
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