JDFP - Diversity by Design

Investing in Investment Bonds

An investment bond (Also known as Insurance Bond) is very similar to a managed fund,

It is also a pool of investment of money from multiple investors, and that these funds are looked after by the selected manager who will then invest the money according to the style of investment and allocation used by each investment bond.

However for an investment bond the taxation system is different and separate to that of a managed fund.

Any income or gain created within a managed fund flows into the owners tax return, while an investment bond has its own tax system at the company tax rate of 30% (may be lower depending on what tax credits your investment style achieves). Once it passes the 10 year mark it becomes "tax paid".

This feature holds some unique benefits for certain types of clients, for example those on high income, inheritance, investment for child education, and those people outside the superannuation rules.

Estate Planning

An important feature of an investment bond is that you can nominate one or more beneficiaries who will automatically receive the proceeds of your investment on the death of the last surviving life insured.

These types of payments are not governed by the investor’s Will so nominating a beneficiary can avoid delays involved in obtaining a grant of probate.