Terminal bonuses are being cancelled.

With profit funds look like losing any remaining shine they have with the news of more cancellations of terminal bonuses.  Policy holders  in closed funds appear ti be being hit worse. Phoenix joins Engage Mutual and National Provident Life (also part of Pearl) in reducing terminal bonuses to 0pc.

Some policyholders in these funds do have guarantees so those without guarantees will be losing out as returns made will be using to pay the Guarantees.

Andrew Barker, chief executive of the independent financial adviser Skipton Financial Services, said: "Smoothing to a large extent has all but gone from with-profits policies. These are practically unit-linked funds – that is, they will fluctuate more directly in line with the stock market – but they are worse than that because they are having to pay for a lot of guarantees as well.''

Mr Barker urged people to seek financial advice before deciding whether to cash in with-profits policies.

WE at YourMoney.co.uk would add to Mr Barkers's words of advice and tell you to seek advice but make sure you get it from an IFA.