Insurance Bonds OR Investment Bonds?
A relatively modest amount of money is adequate to commence an Insurance Bond. These bonds are investment vehicles providing strategic features. The insurer– issuer manages investments on behalf of the holder of the Bond. The investor/ holder directs the placement of their investment funds. After 10 years, withdrawn proceeds free from tax to the holder. Throughout that term, applicable tax is paid from within the Bond. You can read this as being tax-‘free’ at that stage – as in, free from any further tax.
Investment Bonds are the revived version of Insurance Bonds. Coincidental with this name change, a broad range of investment opportunities became available. Consequentially, the net internal tax position also improved.
There are some user-friendly rules around their use. For example –
- tax consequences for accessing the capital before the 10 years;
- increasing the amount invested is limited. There are strategies to minimoise the risk of losing the tax status of investment; and
- transferring ownership is possible. The process needs to be properly done.
Using an Investment Bond 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 –
- phone our office on 07-34213456, or
- at your convenience use the Book A Meeting facility on our website.
(This article was originally posted by us in March 2011. We occasionally refresh/ update it, most recently in June 2025.)