How do unit linked funds work?

A unit linked fund is an investment fund that is divided into units, each representing an equal share of the fund. The value, or price, of the units depends on the value of the underlying  assets In the world of stockmarket investments, there are three main asset 'classes' or types: (i) equities or shares, (ii) fixed income, bonds and cash, and (iii) what is known as 'money market instruments', such as treasury bills, deposits and securities. Some investment managers include property, commodities and other types of investment in their mix of assets.  of the investment fund. When policyholders put money into the investment, they buy units from the company. When policyholders withdraw money from the fund, they sell their units back to the company.

Some of our policies have two types of units,  Accumulation Typically accumulation units are purchased for regular contributions, from year two or three onward, and for all one-off lump sum payments. The ongoing policy charges are paid for by cashing-in units.  and  Capital This type of unit tends to be used during the early years of a policy but not exclusively, for example, an increase in a policy’s premium/ contribution. Your premiums or pension contributions buy capital units and after a specified period, there is a switch from capital to accumulation units. The annual management charge tends to be higher for capital units.  , as may be shown on your Annual Statement. Each unit type has its own value. Your policy value comes from adding together the value of both the Capital and Accumulation units.

The underlying assets are the investments that determine the value of the units. They may include shares, bonds, property, futures and cash. The fund may also invest in collective investment schemes (such as unit trusts and Open Ended Investment Companies (OEICs)). The underlying assets are mainly managed by external investment managers; the mix of assets in any one fund will be based on investment guidelines for that fund.

The price of the units depends on the market value of the underlying  assets In the world of stockmarket investments, there are three main asset 'classes' or types: (i) equities or shares, (ii) fixed income, bonds and cash, and (iii) what is known as 'money market instruments', such as treasury bills, deposits and securities. Some investment managers include property, commodities and other types of investment in their mix of assets. of the fund.

Policyholders buy units (invest) at the offer price and sell them back to the company (encash them) at the bid price. It is normal for the offer price to be higher than the bid price. This difference is called the  bid/offer spread The price we pay when selling investment units should you decide to transfer your policy or take your retirement benefits is referred to as the ‘bid price’. Whereas the price at which we buy the investment units with your contributions is referred to as the ‘offer price’. The bid price is always lower than the offer price. The difference between each price is referred to as the 'spread'. The cost of buying and selling units is referred to as the ‘bid/offer spread’. , and is 5% for most funds.

Unit prices are calculated daily, excluding weekends and public holiday.

The company may freeze the price of units or suspend buying and selling of units if the markets experience excessive levels of volatility. The last time this occurred for funds held by Countrywide Assured was after the attacks on the World Trade Center in New York on 11th September 2001.

There is a variety of charges applied to the funds. You can find out more here.

UK Life funds
Income and capital gains tax are payable and the daily fund price includes an estimate to cover this liability.                

UK Pension funds
Pension policies investing in UK pension funds are not subject to tax.