Instead of interest, we pay bonuses on all of our with-profits products.
We invest our funds as described above and receive a return on those investments, which can vary from year to year. In March/April we review the returns achieved during the previous calendar year and declare a bonus rate for each type of policy for that period. The rate varies depending upon overall investment returns and is not therefore guaranteed to be paid at the same rate, or at all, in future years. However, once bonuses have been added to they will not be taken away, providing the policy runs to maturity, or if you die before the end of the term.
We also try to ‘smooth’ returns over the life of the policy by retaining some of the investment return in good years to maintain bonus rates in less positive years. However, to ensure you receive your fair share of returns on your policy over its lifetime, an additional final bonus may be paid on maturity. Payment of this type of bonus depends entirely on investment performance and the rate at which annual bonuses have been added. It is not guaranteed and, if paid, the rate may vary from year to year.