Unit-linked life insurance
UCITS funds are often an underlying investment of certain life insurance products known as unit-linked policies. As most of the life insurance contributions paid in are invested in pre-selected investment funds, the value of the policy is determined by the performance of the underlying investment funds in which it invests. Investments through insurance policies do not allow the same benefits of rapid access as direct purchase of funds without insurance cover. However, depending on the rules in the investor’s home country or the country where the policy is issued, underlying investments may benefit from favourable tax treatment.
Unit-linked pension insurance schemes can also use UCITS funds as an underlying value in the same way as unit-linked life insurance schemes. Depending on the rules in the investor’s home country, they may be combined with other types of fund or direct investment in assets such as shares or bonds. However, the rules governing unit-linked pension funds and the way their payments are taxed vary greatly from country to country, so that help from a financial advisor is certainly necessary.