Unit Linked Policies tend to carry a minimum of life cover. The largest part of the premiums is invested in pooled investment vehicles such as unit trusts and investment trusts. Hence the investment returns are closely related to the performance of the linked vehicles.
With-Profits Policies tend to be lower risk investments (although there is no guarantee that your investment will not fall in value) with lower expected returns than unit linked policies. The insurer declares a 'bonus', usually annually, that cannot be taken away from the investor once declared.
You can only invest in one Insurance ISA each tax year and an Insurance ISA has a maximum annual investment of £1,000.
CAT standards for Insurance ISAs require providers to:
- charge annually no more than 3% of the ISAs value
- set minimum investments of no more than £25 per month or £250 lump sum a year and
- guarantee surrender values after 3 years at least equal to the premiums paid by the investor
If you are considering an Insurance ISA, you may also wish to consider whether the greater flexibility of a Maxi ISA is more suited to your purpose.
Point to Watch: If you invest in an Insurance ISA you will not be able to invest in a Maxi ISA in the same tax year.
General
Cash ISAs
Insurance ISAs
Stocks and Shares ISAs
Maxi ISAs
