Investments

This is a non qualifying single premium life assurance policy. These are usually arranged as segmented plans set up for the benefit of one of more investors. They can be written with a trust wrapper and can be an efficient product to ensure transition of assets to beneficiaries inside and outside one’s estate. The investor can produce an investment with a range of funds to match their general investment approach. For many investors they offer a simple arrangement that can meet their investment objective of spreading an investment across a range of assets within one product. Many providers also offer the facility to access a range of fund management groups within one plan. Growth within the plan increases the underlying value of the unit price.

As a product the Investment Bond offers the facility for investors to take annual withdrawals of up to 5% of the original investment which is treated as a capital withdrawal and the effective income may be drawn for up to 20 years tax free. As an open ended contract, it is possible to partially or fully encash the bond. These encashments are seen as chargeable events which may give rise to a liability to income tax in the hands of an investor who is, or is likely to become by virtue of part or all of the ‘profit’, a higher rate taxpayer.

As an investor it is possible to combine a range of each product and construct a portfolio of holdings to match the attitude to risk linked to an agreed timescale. Investments are usually viewed as medium to long term arrangements which need to be reviewed and adjusted to suit changing income/growth requirements whilst taking advantage of the different tax benefits that each product offers.

The value of investments may fall as well as rise.

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