An interest sensitive insurance policy is a type of insurance policy where the benefits paid out by the policy are linked to the performance of a particular investment. This investment is typically a savings account or a fixed interest bearing account. The policyholder does not have direct control over the investment, but the insurer does. The insurer will use the money in the investment to pay out the policy benefits if the policyholder dies or becomes disabled.
The main advantage of an interest sensitive insurance policy is that it can provide a higher rate of return than a traditional insurance policy. This is because the money in the investment can grow over time, and this growth is reflected in the benefits paid out by the policy.
The downside of an interest sensitive insurance policy is that the investment performance is not guaranteed. If the investment loses money, the policyholder may not receive the full benefit payout they expected.
Interest sensitive insurance policies can be a good option for people who are looking for a higher rate of return on their insurance policy. However, it is important to understand the risks involved before purchase.