Investment Bonds

Investment Bond is an investment instrument that is offered by life insurance companies. Investment bonds are also known as insurance bonds. They are long-term, tax-effective investment options. Investment bonds are one of the most popular investment products for financial advisers to sell. The investment is provided in the form of a single premium life insurance policy. Insurance companies issue them and make the investors to invest in a variety of funds. Professional fund managers manage these investments. The money invested is used to buy units in a selected fund. Most insurance companies offer a wide range of funds from high to low risk.

Investment Bonds usually have a minimum term of ten years. Investors have the option of extending this term at any time before the maturity of the investment bond. The term can be extended to a maximum of 40 years.  But investor can retain the right to withdraw the investment at any time. The bond has no fixed term so it can be withdrawn in whole or part at any time, but may be subject to withdrawal penalties in the early years

Tax is charged from the investor who gets the bonds enchased before the maturity date. But investors, who hold their bonds for more than 10 years without making any withdrawals in that time, are able to receive their earnings tax-free.