An investment or insurance bond is a single premium life assurance policy. These can often be confused with fixed term bonds on offer from your local bank or building society. Although they both represent an investment of a single premium or lump sum they are very different contracts.

Traditionally insurance bonds carried the promise of an annual bonus and were known as with profit policies. More recently these are unit linked bonds or investment linked bonds offering a wide range of risk and return funds. Along with the investment they carry a very small life assurance element giving them a different taxable position, exemption under CRAG (Charging for Residential Guide) rules and allowing them to be invested efficiently into trusts.

Understanding the difference between the two styles of bonds requires careful explanation before deciding on what's right for you. The team of financial planners at Romilly Financial are well placed to provide you with all the advice you need in understanding these products.