MANAGING A LIFE INSURANCE INVESTMENT

A method of managing an investment of a policyholder which corresponds to a sum assured is described. The invention has particular application to life insurance. The policyholder selects a basic sum assured, and a periodic basic premium corresponding to the basic sum assured is calculated. The basic sum assured is linked to one or more financial indices so that the value of the total sum assured increases or decreases with changes in the value of the indices. An additional premium is calculated based on the cost of the linking, and a composite periodic premium is calculated. By using derivative instruments, the policyholder's investment corresponds to the actual sum assured from inception of the policy, compared with conventional schemes which involve the periodic investment of the policyholder's contributions.