Life Assurance Plan

Life Assurance Plan Options

Many insurance providers offer long term investments in the form of a life assurance plan. A lot of people purchase such an investment as it affords them life cover as well as potentially huge earnings accrued by the investment element of the policy.

How it Works

The investment component of a life assurance policy is often overseen by a fund manager. The resources pooled from the investments of different people are placed into different types of funds so that your money grows over time. Depending on your preference, the funds invested into may be in the form of company shares, property, bonds or cash deposits. You can choose to have the money that your investment has earned to be paid to you in bulk or in a series of regular payments.

You can purchase a life assurance plan yourself, directly from an insurance company or acquire the services of a financial advisor who will present to you a range of recommendations to choose from.

With-Profit Policies

When considering purchasing a life assurance plan, you may want to explore a with-profit policy. Along with life coverage, you get an assured sum when the plan has reached maturity (at the end of the term) and depending on how the investment portion performs, you can also get cash value plus yearly earnings in the form of bonuses.

A terminal bonus is also provided once the policy has reached maturity. It must be noted however, that the provision of bonuses depends on how well the investment does. The amount of bonuses you receive depends on market conditions so this may range from huge figures to minimal amounts of money.

Endowment and Whole Life Policies

The most popular forms of a with-profit life assurance plan are the endowment policy and the whole life policy. Endowment policies are a combination of life cover and savings investment and a lot of people commonly use the money they get to pay off their mortgage debts.

Whole life policies are a lot similar to endowment policies in that they also provide life cover and involve an investment element. Upon the death of the insured, the beneficiaries receive a death benefit. Upon the maturity of the policy, the insured gets a cash value and any applicable bonuses.

You may choose to cash in your endowment or whole life policy but companies charge a penalty for early surrender. Also, the value of the policy may be a lot less than what it would be when you allow it to reach maturity. GP