Investment bonds are life insurance policies where you invest a lump sum in a variety of available funds. When you cash investment bonds in, how much you get back depends on how well – or how badly – the investment has done.

The onshore Investment Bond is taxed under UK life fund taxation rules and an appropriate level of tax is deducted from the bond. It is a single premium, whole of life, insurance product. It can be written on a single or joint life basis and either on a first death or last survivor basis.

You start your bond with a single premium and some providers will allow additional premiums bat any time. These are called top-ups. You can make regular and one-off withdrawals and you can cash in your bond at any time although some product providers may apply an early surrender penalty.

An Investment Bond It is not designed for non-taxpayers, taxpayers with savings income taxed at the starting rate for savings, non-UK residents or short-term (less than 5 years) investors.