What is a unit-linked fund?

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 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.

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 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.


How are the units calculated?

The price of the units depends on the market value of the underlying assets of the fund.

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 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.

Are the buying and selling prices of the units the same?

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, and is 5% for most funds.

How frequently are unit prices calculated?

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

Will I know the price of units before I invest or cash in my policy?

No, the price at which you buy or sell units will not be available to you when you place the deal. This is considered to be the fairest way as it avoids the possibility of informed investors, or the company, gaining at the expense of others by dealing as out-of-date prices.

What happens under extreme market conditions?

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.

What charges are applied to the funds?

The following charges can be applied to the unit-linked funds:

  1. Annual Management Charges (AMC)
    A deduction is made from the funds daily to cover the annual management charge.

  2. Investment Management ChargesI
    The Premium Series funds are subject to daily investment management charges based on the actual fees incurred by the company, subject to a cap of 0.29375% p.a. There are no separate investment management charges on the other funds.

  3. Applicable tax charges
    Charges are applied to investments which are subject to tax under UK legislation.

  4. Buying/selling costs of investment trading
    The costs of buying and selling assets within the funds are brought into the daily calculation of unit prices. They are based on a consideration of the level of the actual cost of investment trading over the previous 6 months and take account of known changes which would impact the level of these.

  5. Directly attributable costs
    Directly attributable costs of managing investments are charged to the fund.

How does tax affect the investment?

Certain funds, the ‘life’ funds, are subject to tax under UK legislation. In these cases, tax is deducted from the funds to reflect income tax and capital gains tax on assets. Tax is accrued on each fund on a stand-alone basis with an allowance for relevant expenses. The daily prices of units include an estimate of the tax that will apply to the funds.

‘Pension’ funds, which will be held by pension policies, are not subject to tax.

What are capital units?

These are units generally allocated to some policies in their early years which are subject to a higher level of Annual Management Charge (AMC). If a policy is encashed the nominal value of the units will be reduced by a “cash in” factor. This cash in factor generally reflects the capital unit AMC amount which is still outstanding. This deduction generally does not apply in the event of death.