Insurance bond Meaning, Uses & Types

Insurance Surety bond Meaning, Uses & Types. 

Surety is Different than Insurance | Kingrise Finance Limited
Surety is Different than Insurance

What is an Insurance Bond?

An insurance bond, also known as an investment bond, is an insurance-related investment vehicle used primarily in the United Kingdom and Australia. The insurance bond is an investment instrument offered by life insurance companies in the form of a whole life or term life insurance policy. Insurance bonds best suit investors who use them for estate planning or who are interested in long-term investing. Also, insurance bonds have some tax advantages.

An insurance bond (or investment bond) is a single premium life assurance policy for the purposes of investment.

Due to tax laws they are a common form of investment in the UK and some offshore centres.

Traditionally insurance bonds were with-profits policies and were often called with-profit(s) bonds. Since the introduction of unitised insurance funds they have often been marketed as unit-linked bonds or investment bonds.

Key Takeaways

  • Typically offered in the UK and Australia, an insurance bond is a whole or term life insurance policy in which remitted money is invested in funds.
  • Insurance bonds are often attractive to investors whose goals are estate planning or long-term investing.
  • Policyholders receive regular dividends or bonus payments.
  • Investors who have not taken withdrawals can receive their earnings tax-free if they hold their bonds for more than 10 years.

Understanding an Insurance Bond

Insurance bonds are simple investments which allow investors to save for the long term. An investor may choose from funds, similar to mutual funds, offered by a life insurance company. The investment can be through a lump sum amount or regular remitted payments, as with a standard life insurance policy. The structure of insurance bonds can be as a whole life policy or a term life policy.

The creation of a bond sold to an investor comes from pooled premium funds. The company will invest the funds into equities and other securities to create a high return on investment (ROI). Holders of the insurance bond receive a regular dividend or bonus payment. Also, bonds may pay out a portion of the fund if cashed in early. Alternately, bonds may pay out on the death of the insured person, who may or may not be the purchaser of the insurance bond.

These bonds originated as a way for a company to distribute surplus funds. Today, they are a collective pool and long-term investment vehicle meant to provide financial growth. Creation of bonds was most common in fraternal life companies, which are similar to mutual benefit societies or other fraternal organizations. With the introduction of unitized insurance funds, which are another form of collective investment, insurance bonds have begun to be called unit-linked bonds or investment bonds.

Surety is Different than Insurance
insurance bond | Kingrise Finance Limited

U.K Tax Advantages of Insurance Bonds

Insurance bonds are ideal investments for long-term investors. The taxes paid on the insurance bonds generally decrease with prolonged holdings.

Investors who hold their bonds for more than ten years without making any withdrawals can receive their earnings tax-free, although different formulas determine this in different countries. This ability to reduce taxes by holding the insurance bonds for longer than ten years is the main advantage of this particular investment vehicle.

Another advantage of insurance bonds is that they can be purchased either to provide long-term growth or to provide a regular income for the policyholder. This income can vary with the market, or the policyholder can buy a bond which guarantees income over the life of the insurance bond.

How To get insurance bond or surety bond or insurance surety bond?

Kingrise Finance Limited is the worlds leading provider of bank financial instruments. We are incorporated in Hong Kong since 22-September 1999 as a Government Licensed Money Lender with Incorporation No.: 0689078. We are worlds leading provider of Bonds, Surety Bonds, Recourse Loan, Non Recourse Loan, Project Financing and Bank Financial Instruments Specialists such as Standby Letter of Credit Funding, Bank Guarantee, Performance Guarantee Bond, Tender Bond Guarantee, Advance Payment Guarantee, Bank Comfort Letter, BG/CD/BD/BCL/DLC/LOC/SLOC/SBLC etc.

Our bank instruments, bg and sblc/sloc are issued from prime banks such as Barclays Bank London, Standard Chattered Bank, HSBC Hong Kong or any rated AAA bank of your choice. All our financial instruments are Cash-Backed and can be used as collateral to secure funding for projects, Discounting, Monetization and Private Placement Programs (PPP)..

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  • Fast Turnaround
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BROKERS: We welcome new brokers who are direct to their client. New brokers are welcomed and are rewarded with 2% commission on every deal they bring to us. 

Kindly contact Us today for all your funding needs, including bonds, business loan, sme Loans, project financing, Lease bg, Lease sblc, Bank Guarantee Provider

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