Glossary: Unit-linked policy

Unlike with-profits policies where the life company determines the return, the performance of unit-linked policies is down to how well – or badly – the investments perform in the markets. Like a unit trust, your monthly payments buy units in funds managed by the insurance company. Unlike traditional with-profits policies, unit-linked endowment policies provide no guarantees as to what growth will be achieved, which means a unit-linked policy has both the potential for higher growth more quickly than a with-profit endowment, but also a greater risk of failure to meet investment objectives.

Relevant to: Funds

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