with-profits life insurance

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Life insurance where benefits to the policy-holders depend on the financial performance of the fund accumulated from their premiums. This is in contrast to without-profits life insurance, where a policy-holder receives a guaranteed level of benefits regardless of the financial performance of the fund. As with-profits policies involve far less risk for the insurance company than without-profits policies, premiums on with-profits policies are less than those on without-profits policies giving the same level of expected benefits at maturity. However, with equal premiums a without-profits policy offers more cover during the early years of a policy. A with-profits policy offers much better protection against inflation over the life of the policy than a without-profits policy.

Subjects: Economics.

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