What is an investment bond?

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An investment bond is a single-premium life insurance policy that can be used to hold investments in a tax-efficient manner.

As with any investment, the value of the bond may go up or down depending on how well your investments perform. The investor might not get back their initial investment.

You might consider an investment bond if you:

  • Have at least £5,000 that you wish to invest.
  • Can afford to invest your savings for a set amount of time.
  • Are comfortable with the potential risks and fluctuating value of your investment.

How do investment bonds work?

When you open an investment bond, you deposit a lump sum. Any money you deposit into your bond will be invested to try to increase the value of your savings. 

A lump sum will be paid out of your bond when:

  • You pass away.
  • You pay a surrender fee to withdraw your investment.
  • Your bond matures.

The amount you receive will depend upon the success of any investments and the terms and conditions of your bond.

How is my money invested?

Your money will be invested in a variety of mutual funds, based on your objectives and attitude towards risk.




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Visit our investment management page to find out how expert advice could help you.

Investment Bond: FAQs

Are investment bonds covered by the FSCS?

Yes. Investment bonds, sometimes called ‘guaranteed equity bonds’, are covered by the Financial Services Compensation Scheme (FSCS).

Are there any charges involved with investment bonds?

Some investment bonds may carry the following charges:

  • Set-up fees – A cost to set up the account, this may be more if you opt for a bond that guarantees you won’t end up with less than your original investment.
  • Switching charges – Most investment bond providers will let you change funds easily, but you could be charged a switching fee. 
  • Surrender charges – If you decide to withdraw money from your bond in the first few years of its term, you may have to pay a surrender charge.