Annuity

Endowment assurance

Term assurance

Whole life assurance

Life assurance

General Insurance

Insurance companies

The assets of all insurance companies are grater than those of pension funds, but for the purposes of the Insurance Companies Act 1982, a distinction is made between the short-term and long-term insurance business of insurance companies. Broadly, short-term business is renewable annually, e.g. house or motor insurance.

Together, the two 'footings' (balance sheet totals) come to £466bn, much larger than the total for building societies and slightly larger than the £44 3.5bn for pension funds. When we include the investment trusts and unit trusts, the aggregate size of these 'institutions' exceeds £1,000 bn., most of which are assets located in the UK.

This comprises insuring such items as:

- Houses - contents and structure;

- Motor vehicles;

- Aviation;

- Marine;

- Public liability;

- Personal accident;

- Unemployment.

This is usually short-term business, with policies renewable annually and often up-rated annually. However, there are two classes of long-term insur­ance which are included here, i.e:

- Permanent health insurance - say for 20 years from the age of 30:

- Critical illness — or 'dread disease'- cover.

Here, the word 'assurance' is used, because death - unlike theft or accident - is a certainty, so that the policy will always be the subject of a claim - except when it has been lost and the deceased's executors are unaware of its exist­ence. There are several main types of life insurance products:

Whole life assurance pays a lump sum at death.

Term assurance pays a lump sum if death occurs before a date stated in the policy (say) before 20 years of the date of the policy. If death occurs after that date, then nothing is paid because the policy has expired. However, the as­sured has had the protection for that period. Mortgage protection policies are term life cover

Here the sum assured is payable at a certain date, e.g. 13 October 1998 or prior death.

An annuity is the reverse of an assurance policy which pays a lump sum after a stream of annual or monthly premiums. With an annuity, the pur­chaser pays a lump sum now⁷, and receives a stream of income payments until his/her death. Joint annuities for husbands and wives or for partners can be bought but they are more expensive because payments will continue until the death of the second survivor. For people's peace of mind - 'what if I die the month after I bought the annuity?' - most annuities can be guaran­teed for five years, so that if early death occurs then payments will continue for five years after the date of purchase.

Prices of annuities - the yield per year per £1,000 spent - depend on the age of the purchaser and current levels of interest rates. The older the buyer and the higher the yields on fixed-interest rate securities, the more income each £1,000 will buy

Дата добавления: 2014-12-29