 Hey guys, it's MJ the student secretary and in this video I want to look very quickly at the differences between a unit link policy and a with-profit policy in Both cases what you would do as an individual is you would give your hard-earned money to a life insurance company Which would then invest it on your behalf Now classically we would do it with profits and more recently there's been this unit linked The big difference is that the unit link gives more investment risk to you as the policy holder But it is a little bit more transparent And it does have a little bit more benefits if you want to surrender early in that type of stuff But what I want to do in this video is just show you the key difference. What is the big big difference? So let's say we have a little graph and we have time over here and we have return over here Now with the yellow line, I'm going to show you how your investments will move when you buy the unit link Okay, when you buy the unit link, it'll go up. It'll come down It will go up. It will be you can see very very volatile. Okay When you have a with-profits account what will happen is your investments will do something like this Hey, and you might actually get a little terminal bonus at the end to push you back up But the big difference being is this volatility. So and this way actuaries come in so an actually will see gosh Look how well the unit linked did over there We're only going to give a very small increase on the with-profits and we're going to put this additional amount into a reserve Well, I think it's not drawing properly into a reserve and What we're going to do is whenever we think that the unit link is giving an excess of return We're going to put money into the reserve. Okay, so this you can see this is we're putting money into the reserve at that area there But let's say the unit link dips a bit what we then going to do over here is We're going to take out of the reserve and we're going to actually give more money to the policy holders when the Investments do badly, but when the investments do well, we give them a little bit less and This is quite nice in the sense that as you can see it strips out a lot of the investment Volatility and can give you something that is just a little bit more It's easier to plan ahead. You can see okay. My investments are doing so well I can plan and budget my my life around it Whereas with the unit linked you can see it's a little bit more crazy It can go up the one month So you think you're rich and in the next month it falls down and you like on on poor and it's it's very very crazy But the with profits it comes in and they smooth out the investment returns and how they actually do the smoothing Well, that's where the actuaries come in building the reserves. That's very much an actuarial practice But it has kind of lost flavor People have found that unit link investing is a little bit more sexy because they can see directly what they're doing and their charges and And all that stuff so there are a few other differences in the structure and all that But this picture here should show you the general the general picture when investments are down You take away from the reserves and when investments are high You put into the reserves to say for a rainy day and that's it Thanks guys so much for watching this video and please feel free to leave a comment in the comment section below. Cheers