with profits and unit linked

tech27

Are there any similarities between with profits or unit linked insurance policy?

kingstreet

The underlying product and taxation will be exactly the same.

It's only how the underlying investments are held which is different.

kingstreet

As there are no endowment products left on the market (there are more flexible and more tax efficient alternatives) it seems pointless explaining something to you you aren't able to buy these days.

What's on your mind?

Do you have an existing WP or UL savings plan?

amnblog

With Profits


Imagine the funds make some gain. The insurers decides how much of that gain to keep, how much to add to your investment each year and then that is yours (annual bonus) . They then decide how much extra to give you at the end of the term (terminal bonus).


Unit Linked


Your contributions buy a share of the fund. The value of that share rises or falls with the value of the underlying assets.


The value today will be different tomorrow and could be quite a bit different.

amnblog

The only similarity is that they are pooled investments designed for medium to long term capital growth.

dunstonh

Are there any similarities between with profits or unit linked insurance policy?

What if it is a unit linked with profits fund?

A with profits fund can be unit linked or conventional. Unit linked is a method. With Profits is a style of investing.

as I am not much keen on such products?

Not an issue. The last mainstream provider on endowments pulled out in 2004. They havent been retailed in 12 years. (I assume you mean endowment as this section covers endowment and not other funds (such as bonds) and pensions which were the only other two areas that offered with profits funds).

It would help to know what context you have for your questions. i.e. what is it that you are looking to know and why?

tech27

Actually I am writing a school paper regarding with profits and unit linked products. I found a lot of differences between both policies, but I could not find any similarities whatsoever.

dunstonh

Actually I am writing a school paper regarding with profits and unit linked products.

Is this by choice or was the subject given to you?

With Profits is obsolete. It is hardly retailed by anyone anymore. You only really come across it on legacy products (i.e. those set up year ago).

With Profits could be used on Life fund investments (offshore bonds, onshore bonds, endowments and friendly society plans) and pensions. There were also a handful of providers that offered it in the early days of Insurance ISAs before that tax wrapper was made obsolete.

It used to be a mainstream investment fund until the early 2000s but it would be a bit like comparing a black and white tv with a ultra HD widescreen. A yesteryear investment fund vs one of the modern ways. Hence my question of whether this was your choice or you were given it as a topic.

I found a lot of differences between both policies, but I could not find any similarities whatsoever.

With profits and unit linked are not policies. They are investment styles that the certain policies could utilise. In fact, in the later years, with profits funds became unit linked. I dont think there were any mainstream conventional with profits funds available this millennium. However, it was too late to save them and increasing regulatory pressures on solvency and costs made them too expensive to provide and too risky to the insurer.

tech27

No the subject was not my choice. Thank you very much for your help, I really appreciate.

dunstonh

tech27 wrote: »

No the subject was not my choice. Thank you very much for your help, I really appreciate.

It may be worth you going back to them and say you spoke with an IFA who told that you with profits is largely obsolete and the last mainstream provider (Standard Life) pulled out in 2004. Maybe they could come up with a more relevant subject for you.