The idea of harnessing the investing power of the stock market, through the buying of units, to increase the return of a life assurance policy is explained fairly thoroughly elsewhere in this website.
But what if you had a direct say in how much life cover you wanted at a particular time.
What if you had a direct say in how much of the regular premiums paid by you should go towards the investment element of the policy?
Well, you can. It's called flexible whole-of-life assurance.
YOU decide what level of premiums you wish to pay - or can afford to pay. YOU decide what level of cover you need.
Flexible whole-of-life assurance primarily provides protection, but with an element of investment, too.
Other benefits are often offered, for example, the option of adding a second life assured.
Levels of cover, calculated on an assumed rate of growth of the units allocated to the policy, include maximum, minimum and balanced.
A high level of cover will require the 'cashing in' of a large number of units, so the investment element will be low.
A lower level of cover, conversely, will result in fewer units having to be cashed in. So the investment level will be high.
The middle ground is a level of cover, for a given premium, which a company expects to be able to maintain throughout the life of the policy.
Usually, life cover is guaranteed initially for 10 years, followed by periodic reviews, whereby premiums or cover may be adjusted to take account of prevailing market conditions.
