Investment Bonds

 Investment Bonds Railway Pensions OntrackAn investment bond is a single premium life insurance policy. They have a small element of life insurance that is paid out after your death. However, it is an investment rather than insurance in the general sense.

An insurance company will take the premium and invest it for income and or capital gains which accrue until a policyholder withdraws money from the policy. As a policyholder does not receive income from the policy, (Annual withdrawals up to 5% are considered as return of capital and are therefore not classed as income) personal income tax is deferred until certain events occur and the insurance company calculates any gain on a bond. As a result, an investment bond is a potentially tax-efficient way of holding a range of investment funds in one place.

Investment bonds can be a good way of allowing you to invest in a mixture of investment funds. They aim to produce long term capital growth and/or generate a long-term return as they are managed by professional investment managers.

Each fund will invest in a range of assets and the price of your units will normally rise and fall in line with the value of these assets, so it s possible to get back less than you have invested. 

Investment bonds can also be placed in a various trusts to assist in inheritance tax / estate planning. 

Advice should be in the form of ongoing reviews as the risk of the overall investment can change over time and disposal of the investment could be timed to help avoid an unnecessary tax charges being applied.

Not all inheritance tax is regulated by the FCA

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