So far as investment management is concerned, assuming that companies that have done well in the past will continue to do well in future has been proved to date a reasonable basis for choice. Thus it is important not just to look at the projected results of a policy taken out today, because some companies project more conservatively than others. There is always a temptation for a small and young company to project higher rates of bonuses or growth. They may be achieved, but if they are, the chances are also high that those companies projecting more conservatively which have done well in the past will also achieve results better than forecast. Table 9 lists (in alphabetical order) those companies that have paid out the highest sums on policies maturing in the last few years.
Table 9 Companies that have produced best results on maturing with profit policies.
Avon London Life
Clerical, Medical & General Scottish Provident
Crusader Scottish Widows
Ecclesiastical Standard Life
Equitable Sun Alliance & London
Equity & Law UK Provident
Guardian Royal Exchange
Investment experience varies over time, so such a list is no more than one among several guidelines for selection. One factor that may be important is the company's attitude to medical examinations. The size of the maximum policy that may be taken without a medical varies, as do the attitudes of companies to the need for medicals at all. Some offices regard as requiring a medical what others might regard as relatively minor health peccadillos. The "loadings" imposed on premiums for below-average health (what the life insurance companies call "substandard lives") also vary considerably. This is another reason why the with-profit policy should always be selected with the assistance of a professional adviser familiar with all such aspects of the life insurance market.
What their investment management comes down to in practice is therefore the adjustment of the proportions of the total fund invested in different sectors in accordance with their view of prospects at the time. Since most companies have a substantial excess of income over claims (that is, they are expanding, taking in more money from new policies each year than they are paying out on old ones), they have always got money to invest.
By choosing the right sector to invest their new money in each year, they can therefore over a period of years improve on the average performance of any one of... see: What you Rercieve