These policies often called investment bonds – are written as whole of life contracts so can continue for as long as the investor wishes.
When the policy is taken out, the premium (less charges) is used to buy units in the selected fund(s) at the offer price.
The policy can then be cashed in at any time, the surrender value being the total value of the units at the bid price on the day of surrender.
These policies are used purely for investment purposes. If the life assured dies, the death claim in most cases is 101% of the value of the units.
This reduces costs and makes it easier for older lives to invest by avoiding underwriting.
