Why do we use Life Insurance Investment Bonds
As financial advisors, our primary goal is to provide our clients with sound investment strategies that can maximize returns while minimizing tax implications. In this pursuit, one investment option that has gained significant traction is the life investment bond. Combining the features of investing and a bond structure within the life insurance act, life investment bonds offer a range of advantages that make them an appealing choice for advisors and their clients. This article explores the reasons why advisors often recommend life investment bonds, highlighting their access to professional managers, estate planning benefits, flexibility, and tax efficiency.
Access to Professional Managers:
One of the key reasons why advisors opt for life investment bonds is the access they provide to professional investment managers. These skilled managers possess in-depth market knowledge and expertise, allowing them to make informed investment decisions on behalf of clients. By investing in a life investment bond, clients can benefit from the expertise of these professionals, who actively manage the portfolio, aiming to achieve optimal returns and mitigate risks.
Estate Planning:
Estate planning is a critical aspect of any comprehensive financial strategy, and life investment bonds offer valuable advantages in this area. Unlike many other investment vehicles, life investment bonds allow for easy and efficient wealth transfer to beneficiaries upon the policyholder's death. By nominating beneficiaries within the bond, clients can ensure a smooth transition of assets and provide for their loved ones in a streamlined manner, without the complexities and delays often associated with traditional estate planning methods.
Flexibility:
Life investment bonds offer a high degree of flexibility, which is highly valued by both advisors and clients. Investors have the freedom to choose from a wide range of investment options based on their risk appetite and financial goals. Additionally, life investment bonds allow for regular contributions and withdrawals, providing clients with the flexibility to adapt their investment strategy to changing circumstances. This flexibility makes life investment bonds suitable for clients with varying financial needs and investment horizons.
Tax Efficiency:
Tax efficiency is a crucial consideration when selecting investment vehicles, and life investment bonds offer distinct tax advantages. By holding the bond for at least 10 years, clients may be eligible to make tax-free withdrawals, without incurring further tax liabilities. This can be particularly advantageous for clients seeking to supplement their income during retirement or fund major life events. Furthermore, life investment bonds can provide potential tax planning opportunities, such as the ability to defer taxable income until withdrawal, potentially optimizing the client's overall tax position.
Conclusion:
In the realm of investment strategies, life investment bonds have emerged as a favoured choice for financial advisors due to their access to professional managers, estate planning benefits, flexibility, and tax efficiency. These bonds offer clients the opportunity to leverage the expertise of professional investment managers while ensuring seamless wealth transfer to beneficiaries. The flexibility and tax advantages further enhance their appeal as a versatile investment option. As advisors continue to prioritize maximizing returns while minimizing tax implications for their clients, life investment bonds have proven to be a valuable tool in achieving these objectives.
IMPORTANT DISCLAIMER
Murdoch Gatti at York Wealth Management Pty Ltd ABN 46 605 610 679 is an Corporate Authorised Representative of Samuel Allgate Investments Pty Ltd AFSL No. 420170; Financial Adviser Authorised Representative Number 001007979.
This article has been prepared without taking into consideration any investor’s financial situations, objectives or needs. Accordingly, before acting on the advice in this article, you should consider its appropriateness to your financial situation, objectives and needs. Every reasonable effort has been made to ensure the information provided is correct, but we cannot make any representation nor warranty as to the accuracy, completeness or currency of that information. To the extent permissible by law, no responsibility for any errors or misstatements is taken, negligent or otherwise. SAI or its authorised representatives may also receive fees or brokerage from dealing in financial products, see the Financial Services Guide for information about the services offered available at York Wealth Management.