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With Profits Endowment Policy ::

The traditional UK "with profits endowment policy" is a long-term investment and provides a combination of regular savings with an element of life cover. The Endowment Policy is generally designed to produce a certain target amount at maturity that will:

repay a mortgage
provide a regular income
finance retirement
pay for school fees
increase general savings

These policies can be taken out on a single or joint-life basis and if the life assured, or in the case of a joint-life policy (either of the lives assured), should die before the end of the term, the sum assured plus all accumulated bonuses will be paid out.

Premiums are normally made to the life company on a regular basis either monthly or annually, usually for a term of between 10 and 25 years.

The With Profits Endowment Policy is not new. They have been written since the late 18th century.

An interesting feature of the With Profits Endowment Policy is that they are assignable, allowing the policyholder to pass all the beneficial rights to a third party such as next of kin, a mortgage lender or a bank. Also allowing the policyholder to sell his policy to an investor of traded endowment policies. This is also an alternative to surrendering a policy.

Common features

With-profits products tend to have certain common features that include:

Premium payments, which are invested in the life company’s with-profits fund. These funds are normally split between cash, property, gilts and a significant proportion in equities.
The smoothing, the level of bonuses is kept deliberately low in strong economic times allowing to build up a reserve for weaker investment times.
Certain guarantees, which tend to grow during the term of the policy and are usually paid at maturity or death.

The traditional UK with-profits endowment policy provides a guaranteed sum assured, which is determined at outset of the contract. The sum assured is guaranteed to be paid; either at death or maturity, whichever is earlier, provided that all premiums have been paid during the policy term.

At the end of each year an annual or reversionary bonus may be added to the policy. Once declared, these bonuses are guaranteed and cannot be taken away. It is the sum assured and the declared bonuses combined, which form the guarantee or locked-in value of a policy and has been one of the main attractions of with-profits endowments. In addition a terminal bonus may be added at maturity.

With-profits endowment policies are linked to the life company’s with-profits fund. These funds are normally split between cash, property, gilts and a significant proportion in equities. The level of future bonuses depends very much on the performance of the with-profits fund, the investment strategy and market condition. Future bonuses can go down as well as up and are only guaranteed once they have been allocated to the policy.

The aim of the with-profits fund is to produce a consistent level of growth. In order to archive this, the fund manager uses a “smoothing” strategy where by the level of bonuses is kept deliberately low in strong economic times allowing to build up a reserve for weaker investment times thus smoothing-out short term market fluctuations.

Genuine Testimonials:

"After saving me £3,600 in premiums - Endowment Check proved to be a good investment."