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Investment linked life assurance policies

With term assurance policies, there is no guarantee of a payout. Lower premiums make this an affordable way of guaranteeing the security of your family in the event of your death. However, some life insurance policies can be effectively used as an investment.

Whole life or endowment policies will provide the beneficiaries with a payout after a fixed period or a death. These payments can be guaranteed fixed return, or in some cases linked to an insurance companies investment performance. These can take the form of profit policies or unit linked policies.

Profits policies may generate rewards from the valuation of the assets and liabilities of the insurers life fund, but premiums will be much higher. This method of insuring has become less common and many companies have ceased it altogether. Unit linked policies link the value of the policy to units in a unitised fund. The units are linked to the underlying value of the fund. The value of the policy can therefore fluctuate depending on the value of the units. The pricing structure and type of fund depends on your insurance company. Many insurance companies now have unitised with-profits funds.

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