Eagle Star are the latest company to cut With Profits bonus rates due to the state of the economy. The company are also imposing penalties (known as a Market Value Reduction or MVR) for taking money out of the With Profits fund.
Penalties apply to unitised With Profits policies taken out since 1991. Annual bonus rates for new style 'unitised' With Profits policies are being cut from 3% to 2.5% and may remove terminal or 'final' bonuses altogether. Any 'conventional' or 'traditional' With Profit policy holders are unaffected by the bonus cuts.
Other companies who have cut or will be cutting bonus rates include Co-operative Insurance Society (CIS) and NFU Mutual.
If you have a With Profits policy with any company and would like more information about bonus cuts and penalties, please contact us.
We will keep you updated with any further bonus cuts announced.