www.InvestmentGuide.co.uk
www.InvestmentGuide.co.uk Other forms of investment type Life Insurance
LIFE INSURANCE
Lump sum invested in a single premium life insurance policy
linked to a fund of fixed-interest securities (Fixed-Interest or Gilt) or to a
fund invested in bank or other interest-bearing deposits (Money or Cash). The
units reflect the value of the assets held in the fund plus the accumulated
income. You can switch the investment link between equity,
international, fixed interest, money, property, mixed or any other type of fund
offered by the same company without cashing the policy.
Some
companies have funds linked to Stock Government Index
Linked. You might consider investing directly instead.
Who can invest Anyone.
How worthwhile Consider instead of Fixed-Interest or Gilt Bond, Stock Personal Equity Plan and Stock Government Fixed-lnterest. Consider instead of Money or Cash Bond direct investment in banks and building societies and offshore banks. Unsuitable for non-taxpayers.
Minimum £500 to £5,000 usually £1,000.
Maximum None.
Suitable Lump sums.
Money back At any time or when you die. You get the current value of the units.
Interest Income is accumulated.
Interest paid When you cash or die. You can choose to withdraw a certain amount each half-year; sometimes yearly, quarterly or monthly.
TaxThe life company pays tax at the same rate as a basic taxpayer would on this type of income; capital gains made by the life company are taxed at 20% - both usually reflect in the price of the units. Non-taxpayers and 10% taxpayers cannot reclaim the tax. Higher rate taxpayers pay extra, currently 18%, when they cash and on withdrawals over 5% a year or if they go on for more than 20 years or on death. Higher rate taxpayers may be be able to reduce the tax due with top slicing relief.
Fees to pay Charges deducted from your investment are 3% to 10% (usually 5%) initially (sometimes less for 'Money' bonds); usually ¾% to 1% yearly.
Passbook None. Insurance policy issued.
Children Unsuitable.
Risk Fixed-interest or Gilt: Moderate as the value of the units can go down as well as up. Money and Convertible: None. UK life companies are covered by a 90% compensation scheme based on the current value of your units if the company fails. Do not invest in an overseas life company which is not authorised in the UK as your protection is less and your income or gain could be liable to UK basic as well as higher rate tax.
How to invest Fill in a proposal form from a life company.
Where from Many life companies.
Other forms of investment
type Life Insurance
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Last updated 29 January 2002