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Insurance

Insurance company income and growth bonds
What they are Investments based on either single-premium insurance policies and/or annuities which give you a fixed income or fixed rate of growth over a set period and then return your original investment at the end of the period. Minimum investment Varies from £1,000 upwards. Maximum investment None. Type of return You get either fixed income from income bonds or a fixed rate of growth from growth bonds (paid when the bond matures).

Tax treatment depends on the underlying investments which make up the bond, but usually there is no basic-rate tax for you to pay. The insurance company has often already paid tax on the underlying investment, but this is the company's own tax bill, so non-taxpayers and lower-rate taxpayers cannot reclaim any tax, and higher-rate taxpayers may have to pay extra.

How long you invest for depends on the fixed term of the bond, which is generally from one year to ten years. You cannot usually get your money back early. Charges - No explicit charges, although the insurance company's costs are one factor taken into account when setting the interest rate.

There is no risk to capital. Vulnerable to inflation. Being locked into a fixed return, you will lose out if returns on other investments rise. Risk rating: around four.

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