investeerivelukindlustus

Investeerivelukindlustus, known in English as investment-linked life insurance or unit-linked life insurance, is a type of life insurance where part of the premium funds are invested in a selection of investment funds chosen by the policyholder. The policy provides a death benefit or maturity payout whose value depends on the performance of the underlying investments, rather than a guaranteed fixed amount.

How it works: Policyholder selects funds; premiums are split; part covers insurance protection; the remaining portion is allocated to investment units; fund value fluctuates; charges include management fees, policy fees, and possible surrender charges.

Advantages: potential for higher returns; tax deferral in some jurisdictions; combines protection with investment; flexibility to adjust funds.

Disadvantages and risks: Investment risk borne by the policyholder; returns not guaranteed; higher fees; complexity; long-term commitment; potential reduced death benefit if investment performance is poor.

Regulation and consumer protection: Subject to life insurance and investment fund regulation; must provide disclosures and risk warnings; suitability assessment is often required; in many jurisdictions there are restrictions for sales to certain customers.

Taxation and treatment: Tax rules vary by country; often premiums are not tax-deductible; cash value grows tax-deferred; withdrawals and gains may be taxed; death benefits may be tax-exempt up to certain limits in some jurisdictions.

Suitability: Designed for investors who seek potential higher returns and accept investment risk; may be appropriate for long investment horizons; may not suit those seeking guaranteed returns or pure protection without market exposure. See also unit-linked insurance policy.