Unit Linked funds

With unit-linked policies, the investment amount buys units in the fund of the investor’s choice. Unit-linked funds may be run by the life company itself or the life company may have links with other life company and/or investment company funds.

The value of a policy is measured by the value of the units allocated to it.This will be dependent on the performance of the fund or funds to which the policy is linked.

Most life company’s have a variety of funds on offer each with different risk and growth prospects. Funds can range from Cash funds to Gilt and Fixed Interest funds and from North American funds to Ethical funds. Nearly all life companies will offer their own set of managed funds, these will invest in fixed interest and equities predominatly, though some funds will hold a small weighting in commercial property. Managed funds are designed to fit different risk profiles and this is decided by the amount of equities the fund is able to hold:

Defensive Managed - limit the equity content to a maximum of 35% of the fund.

Cautious Managed - equity content is limited to a maximum of 60%.

Balanced Managed - equity content is limited to a maximum of 85%.

Stockmaket Managed - equity content may be up to 100% at the discretion of the fund manager.