A Guide To Life Insurance - Return At Maturity ....


Find Out More


Return At Maturity...

As emphasised earlier, the choice of company for a with profit policy is a good deal more important than in the case of pure term or FIB policies.

Historical results show that, over a 25-year term, maturity values of with profit policies have varied by as much as 35%.

A man aged 39 in 1992 paying £2110 a month over 25 years could have received as much as £27,300 or as little as £24,800 in 2007 at maturity of a 25-year with profit endowment.

Many people are puzzled and even dismayed by this sort of disparity.

It arises as a result of two main factors, both of which are worth looking at more closely than we have done so far.

The prime determinant of the amount you receive at the maturity of a with profit policy is the skill of the investment managers of the life insurance company you have chosen.

It is their job, in conjunction with the company's actuaries, to maximise the return from the investment of funds for the benefit of policyholders.

In doing so they must take account of the likely pattern of future claims so that there is always ready money to meet them without having to sell off investments at an unpropitious time. They must also assess the current prospects for the major investment sectors into which they put money: shares, fixed-interest investments and property. see www.hmrc.gov.uk/helpsheets/hs320.pdf

If they put too much into one sector which then fares badly compared with the others, the returns to the policyholders will be lower than they might have been.

On the other hand, they are dealing with very large sums of money - often tens or hundreds of millions of pounds - and they cannot simply liquidate all their property assets or shareholdings, even if they wanted to. To a large extent they are "locked in" to substantial shareholdings and property investments, and their normal practice is to make investment decisions on a long-term basis, not with the aim of taking a quick profit.

An Online Guide To Life Insurance - Learn more ....

Other readers found these pages interesting


Read On: click here for Making The Choice

What their investment management comes down to in practice is therefore the adjustment of the proportions of the total fund invested in different sectors in accordance with their view of prospects at the time.
Since most companies have a substantial excess of income over claims (that is, they are expanding, taking in more money from new policies each year than they are paying out on old ones), they have always got money to invest.
By choosing the right sector to invest their new money........ see: click here for Making The Choice


Our insurance website is an independent marketing website which acts as an introducer to 'whole of market' companies who offer specialist Independent Financial Advice. Each company is authorised and regulated by the Financial Services Authority.


We are not authorised to give advice and we are not liable for any financial advice provided by, or obtained through a third party. The information published on this website is for information purposes only. This site has been approved for compliance purposes by a Firm of Independent Financial Advisors who are authorised and regulated by the Financial Services Authority (FSA). The Chartered Insurance Institute

Giving power to the reader...

  • To contact us, send an email and we will get back to you as soon as we are able. If you are looking for independent life insurance quotations then click here. If you are looking for any of the folliowing: Car insurance
    Bike insurance, Travel insurance, Home insurance, Life insurance, Landlord insurance, Pet insurance, Medical insurance, Dental insurance, Business insurance please click here

  • Have something to say?
    We publish financial articles on this site if they fulfil our requirments. more>>