Equitable Life is to shut down in 2019, with the closure of its With Profits Fund, which will create an average windfall of £6,900 for policyholders.

All policies will be transferred to Reliance Life. This enables higher distributions to with profits policyholders providing members agree to the move and to forego policy guarantees. The transferred monies will then become unit-linked policies with Reliance Life.

Furthermore, a total of £1.8bn is to be added to 261,000 policies and the policy uplift is to increase from 35% to 60% to 70%.

Hargreaves Lansdown chartered financial planner Danny Cox said: “This is a wonderful windfall for Equitable Life policyholders, who now stand to pick up a nice bonus as the With Profits fund and Equitable Life shuts up shop for good. There’s still a bit of a wait, but the uplift is so substantial it’s well worth hanging on for.

"With Profits funds fell out of favour around the turn of the century, when Equitable almost collapsed and the entire sector had to slash policy values as markets tumbled. As a result of the shakeout these funds shuffled their portfolios into bonds in order to reduce risk. Loose monetary policy has helped to boost the value of these fixed income assets, which has now prompted Equitable to lock in these gains for policyholders.

"The closure of the With Profits fund and the end of the Society will draw a final line under the insurance society, almost two decades after the Equitable shut its doors to new business.

"Investors who can hang on will now see significant enhancements to their policy values. For those who can afford to do so it clearly makes sense to wait.”

Share Story: