This form of life insurance includes an investment element whereby at the end of the policy term, assuming the policyholder has not died, a lump sum or income maybe realised.

There are several different types of with profits policies which are generally known as endowments, with-profits bonds or investment bonds. One of the key features among with profits policies is that there is always life insurance cover provided during the policy term.

Endowment policies work on the basis that the life insurance company states an agreed amount to be paid out at the end of the policy which is known as the sum assured. They award bonuses during the period of the policy and the capital bonus may provide a greater return than the sum assured, however, there is no guarantee.

Investment or with-profit bond policies pays bonuses during the period the bond is held assuming investments perform, which can go and up down. Some life insurance providers offer guarantees and allow small amounts of the initial investment to be withdrawn subject to limits.

Depending on the type of product offered, policyholders can pay either monthly or as a lump sum or single premium. In order to generate the forecast returns the life insurance company will invest premiums in UK or global stocks and shares, gilts, corporate bonds or property. This information is normally available to allow the investor to make an informed choice. Professional advice should always be sought when considering whether to invest and those who are selling such with profits policies must be regulated by the Financial Services Authority.