Onshore Bonds
An investment bond is technically a single premium life assurance contract which has only nominal life cover. Bonds are collective investments in which the investments of many individual investors are pooled together. This pooling enables relatively small investors to benefit from the economies of scale made available to institutional fund managers.
A wide choice of managed, general and specialist funds are available offering investment opportunities in equities, property and fixed interest securities. Bonds enjoy the facility to switch between these internal insurance company funds at a reasonable cost if desired. Although classed as single premium investments, top-up facilities are offered for further amounts to be invested either on a regular or ad hoc basis.
There are two types of Onshore Investment Bond:
- Unit Linked – These Contracts offer a wide choice of funds, often with a choice of Investment Managers. The facility to switch between funds and Fund Managers is often available without administrative charge
- With-Profits Bond – The With-Profits Bond is an attractive proposition for the Investor requiring a lower rate of risk. The capital is largely protected against the highs and lows of the stock market. The returns to the Policyholder are smoothed by the Life Company Actuary to give a steady growing return. Although a Unit Linked Investment Bond is likely to deliver a larger return over the longer term, the With-Profits Bond serves as a useful compromise between full market exposure and deposit based investment. There are many such Bonds available, and expert advice on the choice of the Company is essential
