The resurrection of insurance bonds
Why Tower Retirement Investment has launched three new insurance bonds.
Wednesday, June 24th 1998, 12:00AM
In many people's minds the removal of the superannuation surcharge killed insurance bonds. Not so, according to the people at Tower Retirement Investment (TRI).While some fund managers are closing insurance bonds, TRI has launched three new bonds aimed at people with the ability to invest either $300 a month or a lump sum of $10,000.
The key distinction of the bonds is their simplicity, TRI business development manager Suzanne de Vere says.
She says the various legal structures for funds, including unit trusts and group investment funds, where considered but in the end insurance bonds were picked for simplicity.
Having a tax-paid product was put of simplicity theme, she says. Since the target market are people who are most likely on a 33 per cent tax rate, the problems of dealing with investors on lower marginal tax rates doesn't arise.
"Taxation wasn't going to be an issue for the people we are targeting," she says. Despite numerous predictions insurance bonds are dead, de Vere says there is still a market for these funds.
"Insurance bonds offered the greatest simplicity."
Keeping with the simplicity theme entry and exit fees have been removed, however there is a $150 establishment fee. That is waived for Tower Group customers, no matter what product they own, whether it is a Tower Trust fund, a FinTel insurance policy or a Trustees Executors fund.
As part of the fund launch TRI have set up a website savings.co.nz and it is waiving the establishment fee for any investment made over the Internet.
On top of this TRI is running a special introductory offer and will halve the $150 establishment fee for investors coming in before July 31.
The three funds are the mortgage portfolio, VIP balanced portfolio and the international companies portfolio.
The VIP portfolio invests in a fund which was previously closed to new investments. The mortgage portfolio feeds into a Trustees Executors fund and Tower Portfolio Management manages the international portfolio.
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