The with-profit market in the UK contains around £400 billion, roughly the same as the total in building societies. However there is one crucial difference: everyone understands how a building society works and what it offers. With-profits plans, on the other hand, come in all shapes and sizes and are often confusing and very difficult to understand. What you think you might have and what you actually have may be different.

I read this recently - does anyone have further information or guidance?

Regards

That's a fair assessment. To start to understand With Profits you have to remember two things;

1/ What You See Is Not Neccessarily What You Get. Policyholders are led to believe that the value of the policy looks like what it says on paper when in fact, except at specified moments, the value is actually based on a figure that the company decides it is worth; a figure based on the performance of the shares, property, gilts etc. that the With Profits fund has invested in. At times of investment lows, it's often the case that the true worth of a With Profits plan is less than it says on paper.

2/ Most With Profits plans come with guarantees in a variety of shapes and sizes. These guarantees can mean that if you act on the guarantees you might get more than your fair share of the fund. Care needs to be taken to be sure that if you are thinking of exiting with profits you should first of all get a health check assessment on your policy as you might otherwise "throw the baby out with the dishwater".

Can somebody explain what profit plan are?