The short version here is that with-profits endowment policies worked very well before the mid 1980’s. You paid a fixed amount in over 10, 15 or more years and you got a fixed amount out at the end of the term, plus bonuses added each year and a final bonus at the end if things were going well. Over the years the larger companies built up very large reserve funds and these were a good garantee that even in bad times you would get the garanteed amount plus the bonuses already allocated. The full amount would be paid out if you died during the term. Stability was the word here. Companies had a record of 100 years or more of faithful service. Then the stock market got more unstable as the get rich quick follow the crowd, boom and bust took over. The Financial services authority (FSA) took over and started giving orders. It put its own pensions in the hands of Equitable Life, which didn’t pay commission to brokers, interfered with broker commissions, did nothing to control Equitable life or warn of its perilous financial position in the 1990s. When share prices fell in 2000 it ordered insurance companies to invest less in shares, just at the time they were a bargain. In finacial services steadiness is required, regulation also needs to be steady, but if a limit on share investments is to be intrduced it needs to be when shares are doing well. Properly regulated with profits investments are excellent for their proper purpose, which is fixed term, for money you understand you can’t have till the term is up, or if you do you might lose some of it. The Revolutionary government will encourage Mutual Assurance companies to offer with-profits policies. I say this in the full knowlege that they are not really recomended by anyone.
With-profits investment with a life assurance company