Endowment policyholders should expect lower bonuses for the next few years. In a report, actuaries believe that people with policies of 10 years or less have already seen the worst returns, but the customers that will suffer the most in the future would be those with longer-term policies.
Our view
The concept of with profits is the smoothing out of peaks and troughs in markets i.e. in the 'fat' years some of the profits are kept back so that you can still receive bonuses in the lean years. The problem is that many life offices, in a competitive and cut-throat market, offered too higher bonuses in better years to attract clients not leaving enough in the bank for poor years. The concept of 'with profits' has failed at its first, sustained, major test of the last five years.