Insurance Bonds OR Investment Bonds?
Insurance bonds are investment vehicles that can be started with a relatively modest amount of money: that money (and any subsequent amount(s) paid into the bond) is invested in an appropriately selected mix of assets (nominated by the investor) managed by the insurer – and after 10 years, the proceeds can be drawn, tax paid (read that as tax-‘free’ at that stage – as in, free from any further tax).
In today’s environment, these ‘vehicles’ are referred to as Investment Bonds – and they offer a broader range of investment opportunities (and net internal tax consequences) than their predecessors!
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.
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?
If you are wanting to provide for specific future lifestyle needs for children or grandchildren, strategies exist that will help you take capital out of the current income stream, benefit from investment growth and 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: ‘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 use the Contact Us facility on our website: you are assured of prompt and courteous attention.
(This article was posted in March 2011 as part of a client eNewsletter; it has been updated as at May 2014.)