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 Cashflow: Single premium invested upfront = money withdrawn (if any) + lump sum paid on death Hope this helps!
