With news about insurance companies cutting back on With Profits bonus rates, have you considered what it means to you?
If you have With Profits investments, a cut in bonus rates can mean a lot more than just lower returns. For example, if you have a With Profits investment from which you make withdrawals, does this now mean eroding your capital? It could do if you are withdrawing a larger percentage from your investment on an annual basis than you are receiving in bonuses from the insurance company.
Are you one of the many investors taking 5% or more of the original capital from your With Profit investment? What happens now that bonus rates are below 5% a year? Capital erosion (loss) is the answer.
If you are in this situation and would like advice, please feel free to get in touch with us.
Alternatively, if you would like to check it out for yourself, visit the with profits section in Life Cover Adviser.com.