Risk-averse investors are being encouraged to put their money into with-profit bonds as a safer way to invest in equities at times of market volatility. They should produce better returns than deposits when interest rates are low but investors should make the effort to understand what are relatively complicated long-term investment products and try to develop criteria to distinguish between products on offer.

A useful starting point is a guide by investment advisers National Deposit Brokers. While the products lack transparency and are complex, it says with-profit bonds can be excellent products.

Returns on with-profit products are based on annual and terminal bonuses, and fund managers reinvest a proportion of the investment returns earned in good years to support bonus payments in poor years.

Products differ, so investors need to examine what is on offer in terms of annual bonus rates, capital guarantees, charges, asset allocations and income options. It is not easy - the highest annual bonus is not necessarily the best, the rate just reflects the company view of investment performance.

Be wary of enhanced bonus rates in year one - it is a marketing ploy and rates in future years could be significantly lower. It would help investors if product offerers had to comment on the sustainability of the annual bonus rates declared, such as is required in Britain. Here, companies can come into the market with a high annual rate but investors have no way of knowing if this rate can be maintained into the future.