Advantages:

• They provide investors who are relatively risk-averse with some exposure to the equity markets.
• Bonuses are not directly linked to investment performance in the same way as with unit-linked policies, because it is possible for a life office to use its reserves.
• Over the last ten years, most with-profit policies have outstripped inflation
• In some cases they allow investors to participate in the profits of the insurance company’s trading activities.

Disadvantages:

• They are difficult to understand and lack transparency.
• Returns depend to some extent on the insurance company’s subjective judgment of long-term returns and their marketing objectives.
• They may be inflexible and generate poor returns on early surrender or during periods when the MVR applies.