Investment Bonds
An Investment Bond is a single premium, whole of life contract that carries minimal life cover. It is designed to provide growth or income or a combination of both. The bond commences on the date the investment is made and ceases on either the death of the life assured or when fully encashed. When you invest, your money goes into one or more investment funds you choose. Charges are taken from the investment bond to cover the cost of fund management and policy administration.
Investment experts called fund managers invest the money on your behalf. You should only consider an investment bond if you are thinking for the medium (at least 5 years) to long term (at least 10 years).
So how does it work?
Each fund is divided into 'units', which rise and fall in value according to the performance of the fund - remember, there are no guarantees and you may get back less than you invest. There is a published 'unit price': you multiply this by the number of units you hold to calculate how much your Investment Bond is worth.
What investment funds can I choose?
There are a wide range of investment funds available for you to choose from depending on the type of Investment Bond you select and also your attitude to risk. The value of overseas investments can fall as well as rise purely on account of exchange rate fluctuations.
What is the minimum investment?
Depends on the company that provides you with the Investment Bond and the bond itself.