• We are pleased to announce that the winner of our Feedback Prize Draw for the Winter 2024-25 session and winning £150 of gift vouchers is Zhao Liang Tay. Congratulations to Zhao Liang. If you fancy winning £150 worth of gift vouchers (from a major UK store) for the Summer 2025 exam sitting for just a few minutes of your time throughout the session, please see our website at https://www.acted.co.uk/further-info.html?pat=feedback#feedback-prize for more information on how you can make sure your name is included in the draw at the end of the session.
  • Please be advised that the SP1, SP5 and SP7 X1 deadline is the 14th July and not the 17th June as first stated. Please accept out apologies for any confusion caused.

Investment Bonds

S

Smith

Member
the policy type, investment bonds, introduced as a life insurance product, P22 of Chapter 6, but there seems too few introduction or example for this product, that nearly was not able to understand why it's deemed as a life insurance product, and what's the fundamental rationale of it, especially the cash flow underlying.
Could you kindly advise more on this? Thanks a lot!
 
Hi Smith,
From my understanding, a life insurance product by definition is whereby a life risk of an individual is covered. You could see investment bond as whole life assurance contract whereby the lump sum paid in the event of death being higher than the initial premium you paid for (you will choose the investment upfront). However, the only difference compared to a whole life is that you can withdraw money at any time.

So, to answer your questions:
1. The rationale of buying it would be simply protection (meet costs such as funeral costs or inheritance tax liabilities) or even as a saving vehicle (earning higher returns such that one can withdraw money from the bond when they want).
2. Cashflow: Single premium invested upfront = money withdrawn (if any) + lump sum paid on death

Hope this helps!
 
You must log in or register to reply here.
Back
Top