Capital Investment Bonds

A capital investment bond is a life insurance contract used for investment. It aims to provide capital growth, income or both over the medium to long term, with access to your money through regular or one-off withdrawals.

Key features

• Time frame: most bonds are designed for at least five years. If you cash in earlier, you may be charged an early surrender penalty.
• Who can hold one: bonds are set up through insurers without a health check, and people of any age can usually hold one.
• Onshore or offshore: a bond can be held in the UK or offshore (usually the Isle of Man or Channel Islands), which can have different tax treatment. Which suits you depends on your personal tax situation.
• Minimum investment: there is usually no upper limit, but minimums can be higher than for other investments. £10,000 is typical.
• Flexibility: depending on the policy, you may be able to add payments at any time and take one-off withdrawals.

Things to check

• Charges: these vary widely and may include an annual fund charge, an initial charge and an early encashment charge.
• Income withdrawals: any income you draw reduces your original capital, and if you withdraw more than the bond’s growth, your capital falls faster.

The value of investments can fall as well as rise, and you may get back less than you invest. Tax treatment depends on individual circumstances and may change.