Unit-linked companies

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Unit-linked companies

Unit-linked companies are virtually without exception proprietary, and most are much smaller and more recently founded than their larger conventional brethren, though the largest unit-linked companies have now attained considerable size. Unit-linked offices fall into two categories, those owned by some other large and reputable financial organisation such as a bank or another insurance company, and those owned by private family companies, overseas interests or peripheral financial interests. Although recent legislation provides substantial protection for policyholders, it is important to assess the financial strength of the company itself, and the likely attitude of the owners if the company were to get into difficulties.

There are two other types of life insurance as well, neither of which properly falls within the scope of this website. Industrial life insurance concerns the small policies issued for premiums collected weekly or monthly in cash by the company's representative - the "man from the Pru" being the best-known example. The majority of policies used to be a matter of pennies a week but today the sums are increasing and some substantial policies are sold. The administrative expenses of the organisation required to collect and handle premiums in this way are such that the policies themselves are rarely good value when compared with their "ordinary branch" counterparts. Like the credit provided by the "tallyman" who collected debt instalments in cash each week, the industrial offices provide a useful and valuable service for those who do not have access to better facilities.

Much the same could be said of friendly societies in their role as life insurance companies. The main function of most of the hundreds of friendly societies still operating is the provision of sickness and disability benefits for their members. Many also include modest life insurance cover among their schemes; a few, however, make it a major part of their activity. The benefits they provide often represent poor value for money when compared with policies offered by conventional companies. Again, within their own sphere of local benefit schemes the "friendlies" have much to offer, but in terms of life insurance designed to meet the protection and investment needs of the average person they are not real competitors with life insurance companies.

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Types of Insurance Company

Just as there are several varieties of life insurance there are likewise several types of life insurance company. Conventional with-profit and non-profit policies are the speciality of the "ordinary branch" life insurance companies, which may be mutuals (owned by their own policyholders), or proprietary companies (owned by shareholders like any other industrial company).

One separate class of proprietary company is the composite companies, which transact not only life insurance but general business, too.

Many of the largest life companies fall into this latter category (such... see: Types of Insurance Company

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