Private Clients
Savings & Investments
A life-wrapped investment (also known as a unit-linked investment or investment bond) is an investment held within a life assurance policy, offering tax advantages and estate planning benefits. These policies are commonly used for wealth growth, inheritance planning, and tax efficiency.
1. Types of Investment Options Within a Life-Wrapped Policy:
Life-wrapped investments give access to various asset classes, including:
A. Multi-Asset Funds
Invest in a mix of equities, bonds, property, and cash.
Designed for balanced growth and risk management.
Examples: Zurich Prisma Funds, Irish Life MAPS, Aviva Multi-Asset Funds.
B. Equity (Stock) Funds
Focus on global or regional stock markets for higher growth potential.
Can be actively managed (by fund managers) or passive/index funds.
Examples: S&P 500 Index Funds, European Equity Funds, ESG (Sustainable) Funds.
C. Bond Funds
Invest in government or corporate bonds for lower risk and steady returns.
Typically suited for capital preservation or lower-risk strategies.
D. Property Funds
Invest in commercial or residential real estate for long-term capital appreciation.
Can be higher risk due to market fluctuations and liquidity concerns.
E. Cash or Capital-Protected Funds
Offer low risk, with returns linked to deposit rates or structured products.
Suitable for conservative investors seeking stability.
2. Tax Benefits of Life-Wrapped Investments:
Life-wrapped policies have a unique tax treatment:
Gross Roll-Up: Investments grow tax-free until withdrawal.
Exit Tax (41%): Only payable when:
- Funds are withdrawn.
- Every 8 years, under the deemed disposal rule (automatic tax charge).
- No Capital Gains Tax (CGT) or Dividend Withholding Tax (DWT).
- Can be more tax-efficient than direct investing.
3. Estate Planning Benefits:
Life-wrapped investments can be used for inheritance tax planning.
The life assurance wrapper allows assets to pass to beneficiaries with potential tax advantages.
Policyholders can assign different lives insured, impacting how the investment is treated upon death.
4. Who Should Consider Life-Wrapped Investments?
High earners seeking tax-efficient investment growth.
Long-term investors who want a mix of asset classes.
Those planning for inheritance tax efficiency.
People who want managed, diversified investment solutions.