Bonus Payment

With-profits policies pay two types of bonuses – the annual, paid out based on each year’s performance, and terminal, paid out when the policy matures (or on death) to make up any difference between the value of annual bonuses and what your investment has actually achieved. Both are discretionary and annual bonuses in particular tend to be allocated cautiously. Terminal bonuses then make up the difference but may be cut if markets turn, as the performance of underlying assets falls back. This happened during the bear markets of 2000 through 2003 when the magnitude of the falls led to many terminal bonuses being suspended completely.

If you require any further information about the services that we provide or would like to review your financial planning position, please contact us

Articles