In a challenging investment market, the traditional insurance bond has been given a new lease on life – which is great news for high-income earners.
In a challenging investment market, the traditional insurance bond has been given a new lease on life – which is great news for high-income earners.
However, industry uncertainty has meant that only a few organisations have retained the product and its unquestionable benefits. Norwich Union Life is one of those organisations.
An insurance bond is an income deferred investment that is taxed at a maximum of 30 per cent and is tax paid when funds are redeemed after ten years.
According to Allan Griffiths, Managing Director Norwich Union Life, insurance bonds can be a very important part of someone’s wealth creation strategy.
“The administration of insurance bonds is simple for owners and they are extremely tax effective. The last thing many high income earners need is additional income attracting more tax, however they need to put their income somewhere.”
For most people, saving for their retirement is extremely important. They want to ensure that from the funds contributed to superannuation the greatest percentage possible stays working for them.
For individuals whose investment income takes them over the adjusted taxable income threshold, investing in an insurance bond instead of a unit trust or directly into shares can lower or eliminate the superannuation surcharge. The superannuation surcharge takes money out of the fund that could be compounding over time to increase their final savings amount.
Insurance bonds can also be used as a method of estate planning that avoids probate and ensures the investor has control over their funds. By nominating a beneficiary of the Insurance Bond, the owner can ensure that their chosen person receives the redemption value tax paid and this cannot be contested.
Insurance bond owners may also find that their investment doesn’t affect their Centrelink benefits – which are means tested and subject to both the Assets test and the Income test.
For many Centrelink benefits, insurance bonds are considered financial assets and are deemed to pay out income at the nominated deeming rate. For the Family Tax Benefit Part A the concept of deemed income is not applicable and insurance bonds do not add additional assessable income.
Norwich Union’s investment bonds are a unique investment structure that may provide solutions to investor’s taxation concerns. For the medium to high income earner, they provide a tax effective savings plan for the long term.
“If you are interested in finding out more about insurance bonds. I recommend you make an appointment to see an independent financial adviser,” said Allan.
Allan Griffiths is available for interview on 0419 307 319.
For further information, please contact:
Simon Morgan
Group General Manager Public Affairs
(03) 9829 8892
0407 966 632
Note to editors:
- Norwich Union Australia is a group of three specialist financial services companies; Navigator, Norwich Union Life and Portfolio Partners. Through these companies we provide products and services in the areas of wealth creation, wealth management and wealth protection for more than 300,000 customers throughout Australia.
- Globally, Norwich Union Australia is part of CGNU plc, the world’s seventh largest insurance group, the largest insurer in the UK and one of the top five life companies in Europe. CGNU was formed in May 2000 through the global merger of CGU plc and Norwich Union plc.
- CGNU’s principal business activities are long-term savings, funds management and general insurance. It has a market capitalisation of approximately A$40 billion at 03/05/02, worldwide premium and investment sales of more than A$74.8 billion from ongoing business and more than A$556 billion in assets under management. The group has 64,000 employees and more than 15.25 million customers.
- Norwich Union Australia has a sister company, CGU Insurance Ltd, a top 5 general insurance business, which operates independently in Australia.
- This document does not contain all the terms and conditions attaching to product benefits and options. For a full list of terms and conditions please refer to the Offer Document. A policy for insurance cover or an application for an issue of an interest as described in this document can only be effected after completion of the application form contained in a current Offer Document for the product.
- The information in this document reflects Norwich Union's understanding of existing legislation, proposed legislation, rulings etc as at the date of issue. While it is believed the information is accurate and reliable, this is not guaranteed in any way. The information is not, nor is it intended, to be comprehensive or a substitute for professional advice on specific circumstances.
- The securities advice or information given in this document is of a general nature and has not taken into account the investment objectives, financial situation or particular needs of any particular person. Before making an investment decision on the basis of the advice above, a prospective investor needs to consider, with or without the assistance of a professional adviser whether the advice is appropriate in the light of their particular investment needs, objectives and financial circumstances.