Skip to main content.

<%@LANGUAGE="VBSCRIPT"%> <% option explicit %> <% dim rsArticles, sSQL, gStr set rsArticles = server.createobject("adodb.recordset") rsArticles.cursorlocation = 3 sSQL = sSQL & "SELECT TOP 10 Articles.Article_ID, Articles.Article_Title, Articles.Article_Excerpt, " sSQL = sSQL & "Articles.Article_Content, Articles.Article_Posted, Articles.Article_Comments, " sSQL = sSQL & "Articles.Article_Images, Categories.Category_ID, Categories.Category_Title, Users.User_ID, " sSQL = sSQL & "Users.User_Name FROM FB_Users AS Users INNER JOIN (FB_Categories AS Categories " sSQL = sSQL & "INNER JOIN FB_Articles AS Articles ON Categories.Category_ID = Articles.Article_Category_ID) " sSQL = sSQL & "ON Users.User_ID = Articles.Article_User_ID WHERE Article_Status = 1 AND Article_Level = 0 " sSQL = sSQL & "ORDER BY Article_Posted DESC;" rsArticles.open sSQL, adoConn Do While Not rsArticles.EOF gStr = gStr & "" & vbCrLf rsArticles.MoveNext Loop %> <%=gStr%>

Life offices commonly offer several fund types from which units can be purchased and the policy is linked to. Common examples are;

• Ordinary share fund (equity funds) invested in shares quoted on the stock exchange.
• Fixed interest (gilt funds invested in fixed rate securities which are normally government and local authority issues).
• Property funds which are invested in property such as commercial and industrial premises. Because of the high cost of a single property these funds may also invest in other media whilst the value is built up sufficiently to cover the cost of property purchase.
• International funds invested overseas usually in overseas shares. These can be more specialised such as Far East Fund or European Fund.
• Cash fund invested in the short term money markets such a bank deposits and treasury bills.
• Index linked guilt fund invested in UK Government index-linked securities.
• Building society fund invested in building society deposits.

Over a number of years the performance of any one fund can change. This has therefore lead to the idea of managed funds where the life office manages the funds and moves them from one fund to another depending on how the fund managers in the life office perceive future prospects for a particular fund.

An extension of the managed fund concept has been to allow policy holders to switch the investment fund in which their units are held.   A charge may be made for this service but it does allow more flexibility. The switch could be for existing units or for the fund from which future units are purchased from premiums paid.

As fund values can fluctuate the potential exists for fund values to drop and the policy to loose value. So whilst index linked policies may hold a higher potential for fund growth and hence policy value, they also attract a certain amount of risk.

Funds are valued daily, weekly or monthly and the unit linked life policy holders can follow the progress of their investments as the funds are published in the Financial Times and other leading national daily newspapers.    The life office will also periodically issue statements to each policy holder advising them of the number of units issued and their current value.

Some life offices have introduced with profit life policies based on units. These are still with profit policies but the investment is expressed as a unit-linked life policy. The difference between these and other unit linked policies is that the unit price is guaranteed not to fall. There are two types of with profit fund, fixed price and variable price. Under the fixed price systems the unit price is fixed and does not vary.   When the annual bonus is declared additional units are added but they are at the same price as the original units. These extra units can not be taken away. Under the variable system the unit price stands for a year and then when the annual bonus is declared the unit price will be re-valued upwards rather than extra units being added.   The variable price is guaranteed not to fall. There may also be a terminal bonus on maturity of the policy or death.

There are wide differences on how each life office operates and it is not possible to provide a method of operation that applies to them all. The main aim of unitised with profits funds is to give the policy holder the feel of a unit based product with some of the security of the with profits policy. These policies may also offer the policyholder the option to switch between a unitised with profits policy and a true unit linked policy.

With these unitised with profits policies most life offices reserve the right to apply a market value reduction factor (MVR) if the policy is surrendered or switched to another policy type or fund. This is to protect the life office and other policy holders who remain in the life fund, from policies taking out of the fund a value which is higher than the asset value of their allocated share of the fund. These MVR clauses are of substantial value to the life office during times of stock market crashes.

Unitised with profit polices are increasing in popularity as life offices move away from the more traditional with-profit life business. However it is still common for both with profit life policies and unitised with profit policies to share the same life fund.
next - Whole Life Insurance Policies