»Ê¹ÚÌåÓýapp

Guaranteed income bonds

»Ê¹ÚÌåÓýapp ITTOIA/S504 (7) definition of ’guaranteed income bondcontractâ€� merely adopts the regulatory definition of classes of insurance businessâ€� life and annuity business, and linked long term business, excluding annuitycontracts and pension business. In ICTA the phrase guaranteed income bondâ€� is notused; the reference is to ’relevant life insurance policyâ€�.

»Ê¹ÚÌåÓýapp description is one used by the insurance industry to describe a product that can bemade up in a number of ways. It may comprise a single life assurance policy or several,and these may be combined with a life annuity. »Ê¹ÚÌåÓýapp intention of the income bond package isto provide what looks from the customer’s point of view like an income each year,actually based on surrenders, part surrenders, or individual cluster policy maturities,and a return of capital on maturity of the bond. Humorists have suggested the use of thephrase reflects Voltaire’s view of the Holy Roman Empire.

»Ê¹ÚÌåÓýapp significance of the guaranteed income bond legislation lies in identifying types ofpayments under the contract that meet the conditions described at IPTM3550.

Guaranteed growth bonds

»Ê¹ÚÌåÓýappre are also ’guaranteed growth bondsâ€�, where the benefits are accrued andpaid out when the bond matures.

In both cases the benefits are fixed at inception, subject to the detailed policy terms,and in that respect ’guaranteed�. Some guaranteed bonds offer the better of theinvestors� money back, or its indexed return, and market performance, but with a cap.

Indexed bonds and others

Other types of bond may, for example, have returns linked to stock market indices.

It is a feature of life-based contracts that they are extremely flexible.

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