Insurance ISAs

By THIS IS MONEY
Updated:

 

Is the CIS Insurance a mini insurance ISA worth taking out? I gather this is an endowment policy and I'm wary about those. Can you recommend any other mini insurance ISA and tell me how they work? MB, Cambridge.

Justin Modray, independent financial adviser at Chase de Vere says: There are two issues here: should you use your mini insurance ISA allowance and if so is the CIS investment a good bet?

The insurance component of an ISA restricts your investment to just £1,000 and this is too little for many people. Moreover insurers generally have a poor reputation for generating exciting investment returns. So if an insurance ISA is going to be your only ISA investment this tax year you may be better off to consider the stocks and shares or cash components instead. These have higher investment limits and the stocks and shares component has more chance of giving a good return than an insurance company will offer.

But if you have already used up your stocks and shares and cash mini ISAs this year investing in an insurance mini ISA would mean you'll use a £1,000 allowance that otherwise you'd lose so it may well be a good idea.

In this case I recommend looking at Norwich Union's range of insurance ISAs - they are CAT marked and give a good diversity of investments. They are not endowments but simply an investment bond, so you will not be committed to making further investments as you would with an ISA.

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