Practical Application of Investment Bonds

For an investment product that was almost forgotten a decade ago, the investment bond has re-emerged as a tax-advantaged long-term investment option, especially for higher-income earners.

The naming ambiguity comes from the fact that investment bonds are a type of life insurance investment contract; but in practice, they function as multi-purpose life-event savings and investment vehicles used to prepare for a wide range of goals, such as funding education costs, house deposits, and health and aged-care expenses.

Investment bonds are enjoying a renaissance, as fatigue with superannuation changes grows and investors seek specialised options that complement super and better suit their personal circumstances. They offer flexibility from a taxation, estate planning, and even Centrelink perspective—supporting retirement income goals outside the confines of Superannuation (SIS) legislation.

In the June edition of the INPractice webinar series, The Inside Network will provide Australian financial advisers with a comprehensive understanding of investment bonds and their practical application within client portfolios. Designed to equip advisers with the knowledge to incorporate investment bonds effectively, the session covers key topics such as:

• Product Features: Understanding the structure of investment bonds, including the role of the life insurance policy and how it interacts with investment choices;

• Tax Advantages: An overview of tax-deferred growth and the taxation of withdrawals, highlighting the strategic benefits for clients with long-term investment horizons;

• Wealth Accumulation and Estate Planning: Practical strategies for using investment bonds to achieve tax-effective wealth growth, minimise estate tax, and create a legacy for beneficiaries;

• Suitability for Clients: Identifying which clients—whether high-net-worth individuals, retirees, or those seeking tax-efficient strategies—can benefit most from investment bonds.

By the end of the session, participants will be able to confidently assess whether investment bonds are suitable for their clients and understand how to integrate them into broader financial strategies.