What will I get from my With Profits protection policy?
Whole of life policies
This type of policy provides a guaranteed minimum amount in the event of your death as long as you have paid all your premiums and without a break in payments. It may also provide other protection benefits during the term of your policy, such as critical illness.
The policy guarantees a minimum policy value at the maturity date or on your death if sooner.
Your premiums are invested in an investment fund, Countrywide Assured With Profits Fund. Any profits from investing in the fund may be distributed as a bonus at the date of the claim. Payment of a bonus depends on the performance of the fund. For details of the bonus and guaranteed minimum policy value, please see your latest Annual Statement.
How does the With Profits protection policy work?
Your premiums are ‘pooled’ together with other policyholders in the Countrywide Assured With Profits Fund after the charges are deducted. These charges cover the cost of managing your policy and any life assurance or other benefits offered by your policy. A portion of the fund’s pooled assets is allocated to each with profits policy. The portion allocated to your policy depends on the premiums paid, and when, and the unit price at the time of each payment.
Your premiums buy units in your fund and each unit has a price, which changes weekly. There are two types of unit ‘Capital’ and ‘Accumulation’, which are shown on your Annual Statement.
Charges and deductions
There are costs for managing your policy’s investment and for looking after your policy. See ‘What are the charges?’ below.
The fund invests in a mix of UK and overseas company shares, (or ‘equities’), gilts and corporate bonds, such as loans to the government and companies, property and cash deposits. Occasionally this selection is extended to include other types of investment, referred to as ‘hybrid’ products. Your premiums may be invested in collective investment arrangements such as Open Ended Investment Companies (OEICs) and unit trusts. A collective investment arrangement is a way of pooling the contributions of several investors to purchase different types of investments as described above.
The selection and allocation of each investment type depend on the main aim of the Countrywide Assured With Profits Fund, which is to provide the guaranteed minimum policy value for all our with profits policies. For details of this value and the Annual Bonus, please see your latest Annual Statement.
There are principles and practices governing how we manage our With Profits Fund. You’ll also find details on behind the scenes management.
I have a With Profits policy, why does my Annual Statement show units?
The units shown on your statement reflect your share of the With Profits Fund(s) made possible by your premiums, and after the charges are deducted. This is known as a ‘pooled’ investment, which means you pay into the fund along with other policyholders. The combined contributions are invested over an agreed period in, for example, shares, bonds, cash and property. For more details of the investment mix, see the question above ‘How does the With Profits protection policy work?’.
Any ‘profits’ from the premiums paid into your plan will depend on how well the fund is performing.
How do I take my policy benefits?
This depends on the type of protection policy you have with us. For example, your policy may be designed to protect you and your loved ones, or to pay off your mortgage. So, your benefits may be payable at your policy’s maturity date or on your death.
If you are thinking about cashing in your policy, we strongly recommend you get advice before taking any action. This needs careful thought, especially if your policy has guarantees or bonuses. It’s important to check the details to make sure you don’t lose out. Your Annual Statement shows details of your policy benefits and if you have any questions, please get in touch.
To find an independent financial adviser (IFA) in your local area visit unbiased.co.uk.
What affects the benefits payable from my policy?
Many factors affect the benefits payable under your policy. The main ones are as follows:
Investment gains or losses in the Countrywide Assured With Profits Fund affect the value of your policy. Fund performance depends on many factors, including the mix of investment types. The fund is a mix of both high and low-risk investments, such as company shares and property, fixed-interest Government and corporate bonds, and cash deposits. For more details of the investment mix, see the question above ‘How does the With Profits protection policy work?’.
Investment performance can vary over time and so the fund’s progress is regularly monitored and assessed. Changes designed to improve the overall performance for the long term are made when needed. The primary aim of the fund is to provide the returns needed to meet the guarantees of all our with profits policies.
Ups and downs of the stockmarket
Investment performance is a key factor, which is why a technique known as ‘smoothing’ is used. It aims to even out some of the short-term ups and downs of the stockmarket. The formula used for the smoothing technique is adjusted when necessary to make sure the outcome is fair to policyholders.
Charges and expenses
There are costs for managing the investments and looking after your policy. For more details, see ‘What are the charges?’ below.
Cost of guarantees
Normally some money from the fund is set aside to make up any shortfall between the value of the policy’s units and the guarantee benefits. This yearly charge is capped at 1.5% and no excess is kept by the shareholders. All the money set aside is allocated to the policyholders investing in the fund and will be returned to each policy if there is no need to pay for the future cost of guarantees. Since 19 December 2013, no charge for the guarantee has been taken, and this is reviewed at least once a year.
What are the charges?
This is also known as the ‘Policy charge’ and covers the cost of looking after your policy until the maturity date or your death.
Annual management charge
This yearly charge is 1.25% of the fund value. It covers the cost of managing the investment fund(s) and administration. The annual management charge is calculated each day based on the value of the fund. Because we deduct the charge when pricing the fund rather than by selling units from your plan, the amount shown on your Annual Statement is an estimated charge. This estimate also includes the Guarantee charge.
This charge covers the cost of maintaining your policy’s guarantee and is deducted from your With Profits Fund. The estimated annual management charge shown on your Annual Statement takes into account this charge. Currently, we do not deduct a charge for the guarantee (since 19 December 2013). We review the position at least once a year.
The charges are particular to your policy. Your Annual Statement provides a breakdown of these charges for each of your policy benefits, if any, as well as the cost of looking after your policy over the past year.
There may be costs in addition to those mentioned above, arising from the management of direct property investments and investment expenses within a collective investment scheme, for example, transaction costs.
What happens to my With Profits policy when I die?
Your policy has a sum assured, which is payable on your death. If the amount payable at the date of claim is greater than the guaranteed minimum benefit, the difference between these two amounts is the bonus. This is calculated individually for each policy.
What happens if I decide to cash in my policy early?
We strongly recommend you get advice before taking any action. This needs careful thought, especially as your policy has a guarantee. It’s important to check the details to make sure you don’t lose out.
Should you decide to surrender your policy, please bear in mind the surrender value will reflect the lower of the ‘smoothed’ and ‘unsmoothed' unit prices. The value is calculated on receipt of your surrender request. For more information see our dedicated guide ‘Your policy surrender explained’ or call us to send you a printed copy.
Where can I find information about managing my policy?
There’s a series of web pages to answer popular questions about managing your policy, such as “How do I find out what my policy is worth?” or “How do I know what benefits I have on my policy?”
If you can’t find the answer to your question, try searching the site. If that doesn’t work, please contact us.
How can I increase the benefits of my policy?
It may be possible to increase (or reduce) your benefits but it depends on the type of policy you have with us. The best way to find out is to get in touch.
Can I switch to another fund?
It may be possible to switch funds, but this will affect your guarantee. Please contact us to find out more.
Where can I find out how my fund is performing?
As performance information changes daily, you’ll find the latest short and long-term results for each of our funds in our fund centre. Your latest Annual Statement is a useful source of fund information too.
Where can I get financial advice?
Independent financial advisers offer advice. So if you have an adviser, we strongly recommend you speak to them first. If not, you may be able to find one in your area by visiting unbiased.co.uk.