Maximum Cover

Maximum Cover whole-of-life insurance guarantees the sum assured (the money paid to your survivors) as well as guaranteeing fixed premiums for the first ten years, after which the policy is reviewed. The premiums may increase after the review if the investment element of the insurance does not perform as well as it was hoped. The British press has criticised this type of insurance policy after many people were forced to pay out far more in premiums than they had originally assumed.

The problem was that initial premiums were set at a very low level, and so there were not enough funds both to save for the sum assured and provide a viable investment possibility. There was negligible growth from the investment and the premiums had to be greatly increased to provide the agreed level of cover for the policyholder. When taking out any form of investment-based insurance, you should be aware of the risks associated; if the underlying investment does not perform particularly well, you must be able to cover the difference to maintain the level of cover required.