Investment
Bonds
A bond is an investment normally purchased with a single premium
lump sum, but regular payments can sometimes be made.
Your insurance payments are invested by the insurer either
in its with-profits
fund or as a unit-linked
investment where you can choose the fund it is linked to.
Then a guaranteed income bond pays you an income at a guaranteed
rate for the agreed duration of the bond. It then returns
your remaining capital on the maturity date.
With
unit-linked single premium bonds your premium is given to
one or more funds rather than to the single with-profits fund.
The end return you receive depends on the movement in the
unit prices over the period of the life insurance policy.
Insurers offer a range of funds to which your policy can be
linked.
You should ask for an explanation of the numerous funds so
that you understand the different risks and opportunities.
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