Investment Bonds (onshore/offshore)

Question 1

What is an investment bond?

Answer 1

Investing a lump sum in a life assurance policy

The life cover tends to be very small (usually 101%)

Question 2

What is the main advantage of an investment bond?

Answer 2

5% tax deferred withdrawal each year

also come with a 20% tax credit

5% of original investment

Question 3

How does the 5% rule work?

Investment bonds

Answer 3

Do not have to take full 5% every year

Can carry forward previous years 5%

Question 4

How are investment bonds taxed?

Answer 4

On income tax

Despite being due on chargeable gains

Question 5

What is a chargeable event?

DAMES

Answer 5

1) Death
2) Assignment for Money
3) Maturity
4) Excess partial surrender (>5%)
5) Surrender

Question 6

How do you calculate a chargeable gain?

Answer 6

1) Amount receieved on surrender
2) minus premiums paid
3) add withdrawals back (<5%)

CHECK THE WITHDRAWALS ARE <5%