What is an Insurance ISA?

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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 18 October 2018
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An Insurance Individual Savings Account (ISA) is a type of retirement plan that is available in the United Kingdom. The Insurance ISA is one of three different types of ISA accounts that are available to help individuals build reserves for the retirement years. In spite of the name for the financial tool, the emphasis is more on the saving aspect and less on the involvement of insurance in the overall process.

The name for the Insurance ISA is not indicative of any special insurance coverage that the account holder receives with the establishment and maintenance of the account. Instead, the term indicates the type of investments that are utilized to grow the funds deposited in the account. An Insurance ISA will focus on investment opportunities that are issued by insurance companies, rather than employing a broader approach to the selection of the underlying investments. An approach of this type may be practical, especially when investments issued in the insurance sector are expected to perform reasonably well over the long-term.

For the most part, the Insurance ISA is probably the least known of the three different ISA products currently available in the UK. Over the years, cash ISA and shares ISA plans have tended to capture the attention of consumers to a greater degree. As with other types of retirement planning, this form of individual savings account offers some potential benefits, but may not be the best fit for everyone.


One of the more common characteristics of the Insurance ISA is the death benefit associated with the plan. Here, the beneficiaries of the account will receive a total of 101% of the proceeds found in the fund in the event that the holder should pass away. During the first years of the plan, this amount is likely to do little for the beneficiaries, even allowing for the interest income generated on the underlying investments. Once the account has been established for a couple of decades, that additional percent above the actual amount in the account on the day that the holder dies could come to a significant sum that can be used to help with end of life expenses such as burial or settling outstanding debts.

Just like other types of individual savings accounts, an Insurance ISA can only receive a maximum amount of annual contributions from a single account holder. In recent years, that amount has been adjusted upward based on general economic factors. This is especially true for individuals who are past the age of fifty, allowing them to make larger annual contributions and prepare a slightly larger nest egg for retirement.



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