Hundreds of thousands of with-profits investors
should be taking advantage of a clause that allows
them to step away from their ever plummeting
policies without being hit by exit penalties,
research suggests.
A report out this week titled
With-profits – an impending crisis? said that
up to 300,000 with-profits policies set up in the
heyday of with-profits between 1999 and 2003 - were
built with ‘spot guarantees’, providing investors
with a ‘get out of jail free card’ in current market
conditions.
But many of these investors miss out on their
chance to take advantage of this clause because they
are unaware of their guarantee entitlement or the
timeframe over which they must claim, which is often
as short as a day.
Axa Sun Life, Old Mutual, Pearl and Zurich Life
were found to be particularly bad at disclosing this
information to policyholders.
Report author Matthew Morris thinks is so
concerned that these investors may be keeping their
total £6 billion in investments tied up for no
reason that he has launched the website www.exitwith-profits.co.uk
to educate the public about the problems with these
policies.
He estimates that £120 billion worth of the
products have never produced a 'real return', adding
that those remaining invested to qualify for a
terminal bonus are likely to be disappointed.
Average exit charges on with-profits policies are
currently between 13% and 15%.