Life Insurance Guide | Insurance Help Product Information | Unit Linked Policies

Unit-linked policies were introduced as a way of offering investors policies where values are directly linked to investment performance. This is done by formally linking the value of the policy to units in a unitised fund run by the life office. Alternatively, the link can be to the units of a unit trust. The values of the units directly reflect the values of the underlying assets of the fund and fluctuate daily (or perhaps monthly) according to the performance of those investments.

Unit-linked policies vary enormously, but all operate on the same principle – all or part of the premiums will be applied to purchase units in the fund at the price ruling at the time of payment. The future value of the policy will then fluctuate according to the value of the units allocated to it.