Invest Smarter – Investment Growth Bonds

Invest Smarter - The resurgence of investment bonds


Once mainly considered an alternative investment to superannuation, investment bonds (also known as insurance bonds) have re-emerged and are now being more broadly understood as a genuine solution for smarter investing.


More advisers are moving away from pigeonholing investment bonds mainly as an alternative to superannuation and, instead, are considering the use of investment bonds for a larger range of clients and a broader range of investment strategies.


These strategies can range from finding ways to manage and provide value in estate planning, to tax saving strategies, and investing for a child. For high income earners, investment bonds are rapidly growing in popularity due to benefits such as tax being paid by the provider and the ability to access money at any stage.


As a result, clients ranging from high income earners, pre and post retirees, as well as parents and children – are benefiting from these investments that are proven to be both tax-effective and flexible. As well as an alternative to superannuation, investment bonds are being seen as versatile and can be used as an investment diversification tool, as well as a savings vehicle for working towards a specific goal.


At their simplest, investment bonds combine features of a managed fund and a life insurance policy, with the added benefit of the investment bond provider paying 30 percent tax on any earnings in the bond, rather than an individual paying tax on earnings at their marginal tax rate.


Tax benefits and the 10-year and 125% rules

With the bond provider paying this 30 per cent tax, if you hold the bond for 10 years, then as long as you also comply with the 125% rule (see below for more details) you will not pay any personal income tax on the earnings.


So long as the contributions made to the bond each year are not more than 125% of the contribution made in the previous year, they will be considered part of the initial investment. If the bond owner makes contributions that are more than 125% of the

previous year’s investment, the 10 year period resets.


If the bond owner meets the 10-year and 125% rules they are not required to pay any personal income tax on the investment when they make a withdrawal, regardless of how long beyond the 10 years they hold the investment and whether they make any contributions or withdrawals. Tax offsets of up to 30 per cent apply if a withdrawal is made in the first 10 years.


The CommInsure difference

There are two key features that differentiate the CommInsure Investment Growth Bond from others in the market.


  1. An Investment option guarantee which is designed to provide certainty on the minimum value of a client’s holdings in an investment option.  These are offered on four of the nine investment options.
  2. Death Benefit Guarantee that provides certainty on the minimum amount that will be paid, upon the death of the last surviving life insured.


For information on the CommInsure Investment Growth Bond, our guarantees and for access to our strategy papers, visit our website.


Things you should know: This information is of a factual nature only and is not intended to constitute financial product advice. It has been prepared without considering your individual objectives, financial situation or needs. You should consider its appropriateness in light of your circumstances and consider seeking professional advice relevant to your individual needs before making a decision based on this information. CommInsure Investment Growth Bond is issued by The Colonial Mutual Life Assurance Society Limited ABN 12 004 021 809 AFSL 235035 (CMLA), a wholly owned but non-guaranteed subsidiary of Commonwealth Bank of Australia ABN 48 123 123 124 AFSL 234945. CommInsure is a registered business name of CMLA. A Product Disclosure Statement (PDS) for the CommInsure Investment Growth Bond is available at, from your financial adviser or by calling 1800 624 100 (from overseas call +61 2 9745 0905) and should be considered before making any decision about the product. Taxation considerations are general and based on present taxation laws and may be subject to change. You should seek independent, professional tax advice before making any decision based on this information. CommInsure is also not a registered tax (financial) adviser under the Tax Agent Services Act 2009 and you should seek tax advice from a registered tax agent or a registered tax (financial) adviser if you intend to rely on this information to satisfy the liabilities or obligations or claim entitlements that arise, or could arise, under a taxation law.



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