www.InvestmentGuide.co.uk
www.InvestmentGuide.co.uk Other forms of investment type Life Insurance
LIFE INSURANCE
Lump sum investment in a single premium life insurance policy linked to units in a fund of properties (e.g. shops, offices, warehouses, factories and property development). When investing in such funds, check whether the fund really is a property fund, as many invest in property company shares, not directly in property. The properties are valued regularly by independent valuers and their valuation plus rent income reflect in the price of the units. You can switch the investment link to a mixed, fixed-interest, money, equity, international or any other type of fund offered by the same company without cashing the policy.
Who can invest Anyone.
How worthwhile Could be good value for taxpayers as a long term investment (over 5 years). Compare with Property Commercial Direct Investment. 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 (sometimes a bit more if you die). Most companies can defer payment for up to 6 months if they cannot sell a property
Interest Rents and other income are accumulated.
Interest paid When you cash the policy or die. You can choose to withdraw a certain amount each half-year; yearly, quarterly or monthly.
Tax The 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. The proceeds and all withdrawals come tax paid for basic and 10% taxpayers. 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 initially 5% to 10% (5% for companies listed below). ¾% to 1% yearly. Some companies can raise the yearly charge. Maintenance, legal, valuation and rent collection costs are also deducted.
Passbook None. Insurance policy issued.
Children Convenient for a trust set up for children to avoid inheritance tax and probate.
Risk Moderate to high. The value of units can go down as well as up. UK authorised life companies are covered by 90% compensation if the company fails.
How to invest Get details from some or all of the companies listed below and compare them or ask an independent financial adviser. 'Past performance' is published each month in magazines like Money Management.
Where from Companies with established funds include Allied Dunbar, Friends Provident, Legal & General, Norwich Union, Scottish Amicable, Scottish Widows, Standard Life.
Other forms of investment
type Life Insurance
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Last updated 29 January 2002