Funds in units of accounts are investment vehicles, mainly UCITS (undertakings for collective investment in transferable securities), which can be invested in equities, in bonds or in money market assets. There are several thousands of them in the market, with different levels of risk, geographical regions (Europe, United States, World) and varied sectors of activity.
The main characteristic of funds in units of account is that its value goes both up and down with movements in the financial markets. By investing funds in units of account, the saver is potentially exposed to a risk in the loss of capital, which varies in degree depending on the underlying assets. But the saver can also hope to be rewarded for this by a higher return.
Thus a unit-linked life insurance policy responds to the concerns of savers seeking to benefit from long term exposure to the performances of the financial markets; in return, these savers accept a risk of loss of capital. Depending on the country of distribution and the subscriber's risk profile, unit-linked Luxembourg life insurance policies may be linked to external funds, internal collective funds and/or internal dedicated funds:
- External fund: the subscriber selects one or more investment funds from a range of funds managed by major asset managers.
- Internal collective funds: the subscriber chooses to invest in one or more internal funds of the company, managed by a manager mandated for this purpose in the context of a clearly defined investment profile.
- Internal dedicated fund: depending on the amount of the premium, it is possible for us to offer the subscriber a fund dedicated to his or her investment policy and suited to his or her personal needs. A dedicated fund is subject to Particular Conditions determining the profile of the fund, any investment restrictions, the manager and custodian of the fund and the fees associated with the management and custodian mandates.