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Investment Bonds.
An investment bond is in fact a whole of life policy usually paid for with a lump sum (or single premium). Proceeds can be taxable if the investor is a higher rate taxpayer and may also be taxable for lower rate taxpayers.
The money invested is used to buy units in a selected fund. Most insurance companies offer a wide range of funds from low to high risk.
Investment Bond Special features.
5% of the original investment can be withdrawn each year for 20 years (until entire capital is returned), deferring taxation until final encashment.
The main Advantages of an investment bond are given below.
 a packaged investment for growth;
can take income by cashing in units;
simple to operate;
wide range of geographical funds available.
Types of investment bond include With profits, distribution, guaranteed growth and unit linked.
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These are intended as a medium to long term investment. If you withdraw from this investment in the early years you may not get back the amount invested.
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