The insurance company, in this case, takes responsibility for the funds you have set aside for investment. The money is split into two parts. The first one will be there to guarantee you the return of your money in case of unfavourable market conditions. The other one, contrariwise, will generate returns on the investments in question.
You should keep in mind that your contract might not totally protect your capital from the adverse market conditions. To check for that, you will need to read your contract very closely – or ask a professional lawyer.
You will be able to choose one of the investment programmes set out by your insurance company. Each company decides individually what will go into an investment portfolio and devises offers that follow different strategies. Usually, the strategies fall under three categories – aggressive, balanced, or conservative. As you would expect given their names, the aggressive strategy comes with a higher yield, but also higher risks. Contrariwise, the conservative strategy reduces those risks – but at the cost of lower returns.
A worthy consideration with investment insurance is that unlike bank deposits, your money is not protected. (As it is under the FSCS scheme with banks.) Hence, you will not receive anything if your insurance company goes bankrupt.
Furthermore, you should check the conditions upon which your contract can be terminated – willingly or not. Remember, both scenarios are possible, and you should thoroughly understand the consequences born of such termination. It is vital to check the reliability and reputation of the company you intend to sign a contract with.
