Unit Linked Bonds

A unit linked bond is a single premium whole of life policy, where a once off premium is invested to purchase units of a unit fund or funds operated by the life assurance company.

 

Tracker Bonds

Life Assurance companies offer structured investment bonds (tracker bonds), that aim to allow investors participate in equity market returns with the benefit of a high level of capital guarantee. They are fixed term bonds, usually between 3 to 6 years.

Structure

The investment made by an investor in a deposit Tracker Bonds is split into three components:

• Most of the depositPROTECTION

• Personal Protection

• 1/ Income Protection

• Ever wondered how you will pay your bills/ mortgages, look after your family should you be unable to work and have no income? mypremium.ie can erase this worry for you by protecting your income with an Income Protection policy. A huge benefit of taking out an Income Protection policy is that you can avail of tax relief at your marginal rate of tax thus making your premium more cost effective. (Your premium will be reduced by either 20% or 41%)

• Are you self-employed? The government will only pay State Illness benefit of €188 per week for employed people. Therefore if you are self-employed you will have to be entirely self-sufficient and it is extremely important that you protect your income with an income protection plan.

• Income Protection pays out a regular income (up to 75% of gross income) after a deferred period should you be unable to work due to sickness, accident or disability up to retirement age.

• Here at mypremium.ie we can choose from a huge range of Product Providers to tailor the best plan to meet your specific needs.

• Flexible Options:

• Range of Deferred Periods: 4, 8, 13, 26 & 52

• Guaranteed Premiums- premium will remain fixed for the whole term of the plan

• Access to Best Doctors- a second medical opinion

• Waiver of premium- do not pay your premium during a claim

• Guaranteed Insurability: Increase your cover by up to 20% of the original amount every three years

• Own Occupation- benefit paid if insured is unable to carry out their normal occupation

• Change of Occupation- life insured is not penalised for changing occupation

• Indexation- premium & cover amount will increase each year

• Protect your family today, don’t delay. Call one of our Financial Advisors on 1890 666 666 for an in-depth consultation.

Investment Term

 

Being ‘’whole of life’’ policies, unit linked bonds do not have any fixed investment term. However due to impact of charges and the fluctuating value of unit fund prices, it is normally recommended to leave the investment for at least 3 years and preferably at least 5 years.

 

Charges

 

A bond may have some or all of the following charges:

 

• Initial monetary set up charge

• Allocation rate

• Bid/offer spread

• Fund Management charge

• Fund Dealing costs

• Early encashment charge

• Administration unit cancellation

• Trail commission deduction

• Bonus units

 

Death Benefit

 

Unit linked bonds frequently provide a death benefit slightly higher than the encashment value of the bond. E.g. 101% of value of units on death.

 

Unit Fund Choice

 

There may be a wide choice of different funds managed by a range of external or outside fund managers, in addition to company’s own managers. There may also be specialist unit funds i.e. geographical. There may also be funds with difference investment management styles.

 

Partial encashment

 

Most unit linked bonds offer the investor the option to take a partial encashment. Any early encashment charges would only then be applied to the unit holding actually enchased.

 

Fund Switching

 

Unit linked bonds offer investors the opportunity to switch units from one unit to another, usually on a Bid to Bid price basis.

 

 

With Profit Bonds

 

 

 

A with profit whole of life policy is a form of traditional with profit which provides a guaranteed sum assured payable on death whenever that occurs, in return for a fixed premium. The premium may be payable throughout life or may cease at a specified age i.e. 65.

 

The life company actuary works out the profits of the life company’s with profit fund each year and then decides on the bonus to be added to it with profit policies for that year. There may also be a terminal bonus added on maturity of the policy.

 

Encashment Value

A with profit whole of life policy acquires a surrender/ encashment value i.e. a cash sum which the life company pays if the policyholder decides to stop paying premiums and terminates the plan. The encashment value gradually builds up over the years.