It’s important that you fully understand how our With-Profits Bond works before making an investment. If any aspect isn’t clear, we’ll be happy to explain.
Q. Who is eligible to apply?
A. Any UK resident aged 16-79 can apply, regardless of their state of health.
Q. Can my partner and I apply together?
A. Yes. You can take out a bond as an individual or as a couple.
Q. Can I take out a bond for my child or grandchild?
A. Yes. You can apply for a bond on behalf of a child, no matter what your age.
Q. How much can I invest?
A. You can invest from £1,000 to £1,000,000. Existing bond holders can take out additional bonds from £500 each.
Q. How is my money invested?
A. We invest your money in our with-profits fund. This invests in assets such as commercial property, company shares (equities), fixed interest securities such as company and UK government bonds (gilts), as well as cash.
Q. Does the bond have a set term?
A. No, you can cash in the bond, fully or partially, at any time. However, we recommend that you hold it for a minimum of 5 years and, ideally, for at least 10 years. If you cash it in or withdraw part of your original investment within the first five years, there will be a penalty charge and you could get back less than your original investment.
Q. When can I withdraw money?
A. You can withdraw a minimum of £500 at any time, as long as your bond value remains at least £1,000. Please bear in mind that if you cash in or partially withdraw your bond during or following adverse market conditions, we may apply a Market Value Reduction (MVR).
Q. How do I keep track of my investment?
A. Every year we’ll send you a statement that shows details of your bond, including the value of any bonuses allocated.
Q. What happens to the Bond if I die?
A. The bond has built-in life cover. In the event of your death, we’ll pay out a lump sum that is EITHER 101% of your original investment (adjusted for any partial withdrawals that you may have made) OR the sum assured plus bonuses, whichever is the higher amount.
Q. How does my money grow?
A. We may add bonuses, annually, to your initial investment depending on the performance of our with-profits fund. Annual bonuses are calculated as a percentage of your initial investment. Once allocated, they can’t be taken away (unless an MVR is applied).
Q. Why can’t you guarantee an annual bonus?
A. Bonuses are awarded to your investment based on how well the fund has performed. The fund performance will fluctuate and this means we can not guarantee any bonus amounts.
Q. How much will I get back?
A. On the bond’s 10th anniversary (or in the case of a child, their 18th birthday – whichever is later) and for three months after, we guarantee that the cash-in value of your bond will be at least that of your original investment adjusted for any partial withdrawals that you may have made. If you cash in your bond within the first five years it will be subject to a penalty charge. If you cash in your bond during or following adverse market conditions, we may apply a Market Value Reduction (MVR). A penalty charge or MVR could mean that you get back less than you have paid in. In addition, if bonuses are less than the charges on your investment then this will reduce the value of your investment. In all cases, please bear in mind that inflation reduces the future value of any investment.
Q. What are the penalty charges?
A. A penalty charge applies if you cash in your bond within the first five years. In the first year, this corresponds to 5% of the bond value. The charge then gradually decreases to become 1% in the fifth year.
Q. Will I have to pay tax on my investment?
A. The tax treatment of the policy depends on your individual circumstances and may be subject to change in the future. Currently, basic rate taxpayers aren’t subject to capital gains tax or income tax on payouts from the bond. That’s because tax has already been paid by the Society on the investments in the with-profits fund. Higher rate taxpayers have to pay additional income tax on any gain they’ve made. Non-taxpayers can’t reclaim tax that has been paid by the Society. The investment forms part of your estate and in the event of your death could be liable for inheritance tax.
Q. What about partial withdrawals?
A. If you have at least £10,000 in your bond you can withdraw up to 5% of your original investment each year, without immediate tax liability though tax may be payable on closure of the plan. If you withdraw more than 5% of your original investment, then you might have an immediate tax liability, depending on your tax status.