Endowments
These are usually associated with mortgages. They have recently come under criticism because returns are lower than were expected a few years ago and some holders are being notified that their policy is now unlikely to produce enough money to pay off the mortgage when it becomes due.
However, they are a suitable vehicle for lump sum investing and take the form of a one off lump sum investment in a ten year policy. There are with profits and unit linked varieties, the only difference being a terminal bonus in the case of with profits, which should be substantial.
Second hand endowments
There is a market in second hand endowment policies and these can be a good investment. You buy the policy for a lump sum and unless it is paid up you need to be able to continue paying the premiums till maturity.
As the life assurance element continues on the life of the original investor, you can get an earlier pay out if that person dies but you need to keep in touch in order to find out if it happens.
To spread the risk, you can invest in second hand endowments via a specialist investment trust.
Maximum investment plans
This is a fancy name for what is actually an endowment policy do not be deceived into thinking it is something else. There are also maximum savings plans identical except they are intended for regular monthly contributions instead of a lump sum.
Broker funds
Independent financial advisers and stockbrokers offer broker funds to their clients. These are investments in the funds of a life assurance company where the broker makes the allocation over the individual funds for you.
Originally investments were 'fettered' to the funds of the chosen life company, which meant they were akin to 'fund of funds' investments, except that there the life company makes the allocations.
However, many are now 'unfettered', i.e. they permit investment in other life companies' funds, unit trusts and even individual shares.
The advantage claimed for broker funds is that the IFA/broker has extra expertise in the allocation decision, enough to more than compensate for the higher costs (but costs are not necessarily doubled because there will be some discounting of costs between the two parties).
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