Frequently Asked Questions

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You asked: What is the With-Profit Income Fund? How are bonuses added? (Please note this fund is no longer available to new investors)

The With-Profit Income Fund was available through Portfolio, our former investment bond product. There were two income options - a natural income or a fixed income. Both options pay you a regular income on a monthly, quarterly, termly (three times a year), half yearly or yearly basis - whichever you chose.

The With-Profit Income Fund option is designed to provide a regular income rather than accumulate growth.

How we add bonuses
There are two types of bonus that you can receive: a regular bonus and an additional bonus. They are applied by adding more units to your investment bond, which we then use (by cancelling them) to provide you with an income.

Your yearly statement tells you our most up-to-date bonus rates.

With-Profit Income Fund regular bonuses are paid out as income, either natural or fixed. The natural income option aims to maintain the initial amount allocated to your investment. Your initial investment may still be reduced if the bond's charges are higher than the bonus rate or if an early exit charge or Market Value Reduction (MVR) applies when you cash in your bond or switch out of the With-Profit Income Fund. As the regular bonus rate can vary from year to year, your income can also vary. If you choose fixed income, you'll receive at least a certain percentage of your payment to us each year.

Risks
If you choose a fixed income, it's possible that the returns earned by your investment won't be enough to cover the income you've chosen to take. This will happen if you choose an income higher than the bonus rate. If the fund's returns don't cover the income you chose, we will use your allocated investment to pay the income you've asked for. This means that when you cash in your investment, you may get back less than you originally invested.

With-Profit Income Fund additional bonuses are sometimes added, to supplement your income. They aren't necessarily paid every year, and may change from year to year - so your income can also vary (with the natural income option).

We review the additional bonus at least once a year, but may do so more regularly. The With-Profit Income Fund does not pay a final bonus but may pay an additional bonus instead.

 

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