An investment bond, also known as an insurance bond, is a single premium life insurance policy used for investment purposes. It is wise to invest in bonds because they provide growth and income and have access to a wide range of investment funds. Investment bonds also offer a tax advantage by attracting investment once the tax free limit has been used..

Life insurance, or life assurance, is the contract between the policy owner and the entity providing the insurance. Upon the death of the policy owner, an agreed upon sum of money is paid to the designated recipient. The policy owner pays a stipulated amount called a premium. Covered events include death and accidental death. "Death" being categorized by natural or health issues, such as old age or illness. "Accidental death" would be the result of an accident, such as a car wreck or drowning.

Some situations that would void the claim would be suicide, war, riot, or fraud..

Life based insurance bonds fall into two categories, protection policies and investment policies. Protection policies provide a benefit, usually in the form of a lump sum payment, in the event of a specified even. The main objective of the investment bond is to facilitate the growth of capital by regular or single premiums.

Investment bonds are a little different as they are not life insurance but life assurance. Whereas life insurance is based upon payment at death, life assurance refers to a benefit being paid out for an even that is certain to happen. A good example is pension. Pension is built up during a personРўs work life.

Upon retirement, the pensioner will use his pension funds to buy and annuity contract that will guarantee a certain payment each month until death..

Investment : Investment bonds