Insurance Bonds OR Investment Bonds?
Insurance bonds are investment vehicles that can be started with a relatively modest amount of money. The invested capital is invested in an appropriately selected mix of assets (nominated by the investor). These investments are managed by the insurer – and after 10 years, the proceeds can be drawn. When drawn after that term the proceeds will be tax paid within the Bond. You can read this as being tax-‘free’ at that stage – as in, free from any further tax.
Some years ago, Insurance Bonds were revived as Investment Bonds. With the name change, a broader range of investment opportunities (and net internal tax consequences) was introduced.
There are some user-friendly rules around their use. For example –
- accessing the capital before the 10 years can result in some tax to be paid on the proceeds;
- increasing the amount invested (without affecting the tax status of the particular Bond) is limited; and
- transferring ownership, whilst possible, needs to be properly done.
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How can Investment Bonds be used to effect?
Do you want to put some money aside for the future of a child (your own, a grandchild etc)?
Would you prefer to do it in a tax-effective way?
Are there some Estate Planning benefits?
Clients wanting to provide for specific future lifestyle needs for children or grandchildren, can benefit from strategies that will help –
- take capital out of the current income stream,
- benefit from investment growth,
- pass to the beneficiary either tax-paid or tax-free, and
- create certainty of outcomes by avoiding the risk of challenges to Wills.
Some ideas for using Investment Bonds…
We have posted some Case Studies on our website Library. The following links will take you directly to them:-
- Child Endowment Plan Case Study;
- Case Study: Education Funding and Optional Endowment Plan for Child; and
- Case Study: Estate Planning.
Continuum Financial Planners are available to help you.
The experienced advisers at Continuum Financial Planners Pty Ltd are available to assist you in finding the best insurance/ investment bond strategy to meet your needs. Our team works to the mantra that: ‘we listen, we understand; and we have solutions’…that we deliver in ‘personalised, professional wealth management advice’. To arrange and appointment to discuss how we can help you access these benefits –
- call our office (on 07-34213456) or
- at your convenience use the Make A Booking facility on our website.
(This article was posted in March 2011 as part of a client eNewsletter. It has been occasionally been refreshed/ updated, most recently in as at October 2024.)
