These policies, which can be in the form of a fund, a bond or a pension, have been used to for long-term savings or retirement or to pay off a mortgage. Investors are assured of some protection from the vagaries in the stock market by a ‘smoothing’ process in the level of returns.
The possibility of a future lump sum in the form of an endowment or income is a key selling point for many customers.
Answers provided by Paul Fidell, senior investment business development manager at Prudential, and Kevin Arnott, with profits actuary at the Phoenix Group.