A 25-year, Au50 per month mortgage endowment in the main Aviva With-Profit Fund
, taken out on 1 January 1989:
On the positive side, he said, some consumer-protection measures like enhanced with-profit fund
management and increased guaranteed surrender values on traditional products could strengthen the insurance industry's foundation in the long term because customer confidence would be enhanced through fair treatment.
Usually, the calculation takes into consideration factors such as completed policy years, policy type and time to maturity, with-profit fund
performance in case of participating policies, besides the company's customer philosophy and industry practice," says Suresh Agarwal, executive vice-president, head, distribution and strategic initiatives, Kotak Mahindra Old Mutual Life Insurance.
The investment choice has increased substantially in the last decade and therefore, there is often no need to select a with-profit fund
The surplus assets in the with-profit fund
, known as the inherited estate, was valued at Au2.
Payouts from the with-profit fund
are linked to the rate of investment growth achieved on the fund.
When Provident Mutual was swallowed up by General Accident, investors in the with-profit fund
got an average of pounds 300 more.
A with-profit fund
might be suitable so long as there are more than 10 years until the money is required.
Some investors also like to withdraw 5% each year from a with-profit fund
tax-free - although higher rate taxpayers can get caught with a tax bill when their policy is eventually cashed in.
5 per cent before tax on their CGNU with-profit fund
Hooton noted that default money is likely to wind up in an insurer's with-profit fund
, which is held on behalf of customers with participating life insurance policies.