What is an investment bond?

shaz_mum_of__2

We have been going through my recently widowed MIL's finances (under power of attorney as she is unfit)

We have found a certificate of investment in her name but with my hubby and his brothers name on as "lives assured" what does this mean ....and who does the money belong to??

the bond seems to be split into 3 different types of managed fund one of which is property

Its worth quite a lot of money and she has no clue what it is (neither do we )

Any ideas for a finance novice ..................

Thanks

Shaz

Lokolo

Who is it with?

shaz_mum_of__2

St James Place

have looked at their website

Clear as mud to me !!

Shaz

dunstonh

Investment bonds are a tax wrapper. A container for investments. Just like ISAs or pensions.

The policy is technically a single premium life assurance plan (either a whole of life one or fixed period of no less than 10 years. Although fixed period ones are unsual nowadays).

You will have policy owners and lives assured. They can often be written on single life basis or joint life basis. The joint life can be on first death or last death. The lives assured do not have to be policy owners.

The provider should be given a death certificate and if the executor is known, then given their details. You could ask for details on the policy at the same time. Or get the original adviser to supply that information (hopefully the papers show who it is).

Lokolo

It is like one of those things where you put in £10 a week until you die things from daytime TV adverts?

(you usually get a free pen or something when you sign up!)

dunstonh

It is like one of those things where you put in £10 a week until you die things from daytime TV adverts?

No.

its just like unit trusts but held under a life assurance contract (often the life assurance is just 1% or even 0.1% just to get it to qualify for life assurance taxation.

Think of unit trusts being put in an ISA. You can put them in an investment bond as well.

shaz_mum_of__2

Thanks i think i understand.............

So can the owner cash it in it ?

the initial investment/value is 50k the latest statement says the fund is valued at just under 60 is that its real value ?

Thanks

Shaz

Stavros_3

shaz_mum_of__2 wrote: »

Thanks i think i understand.............

So can the owner cash it in it ?

the initial investment/value is 50k the latest statement says the fund is valued at just under 60 is that its real value ?

Thanks

Shaz

60 What ??, pence, pounds, Thousand pounds, you need to elaborate

a7man

Stavros wrote: »

60 What ??, pence, pounds, Thousand pounds, you need to elaborate

just being awkward....

a7man

shaz_mum_of__2 wrote: »

Thanks i think i understand.............

So can the owner cash it in it ?

the initial investment/value is 50k the latest statement says the fund is valued at just under 60 is that its real value ?

Thanks

Shaz

You are allowed to deduct 5% tax free each year. This can be rolled up so if its been in force for 10 years you will be able to cash in 50% of the initial investment (£25k).

These are mainly used for high rate tax payers to benefit from this release of tax free cash while leaving funds to build up in the wrapper.

You can cash it in early but it will usually have penalties, especially high if its a fairly new investment.

whiteflag_3

Stavros wrote: »

60 What ??, pence, pounds, Thousand pounds, you need to elaborate

Easy!!! stavros are you saying was worth 50K now worth 60p, now I know things are bad and its a St James Place bond but thats a bit over the top.

Shaz, you can cash it in, but the reason for having your other half as a life assured would have been to allow the bond to continue after the MILs death. Might not be the best time to cash it in at the moment, best to get professional advice before deciding. Might cost you but could save you money in the long run.