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Insurance bond

What should be entered as an Insurance Bond

The following should be added as an Insurance bond:

  • Insurance Bonds

  • Investment Bonds

How to add an insurance bond

  • To add an existing Insurance Bond, go to the Current situation step (top menu), then the Assets & Loans sub-step. And then click the +Add Assets button (on the left menu).  Then choose Insurance bond.

  • To add a new Insurance Bond, go to the Current situation step (top menu), then the Assets & Loans sub-step. And then click the +Add Assets button (on the left menu).  Then choose Insurance bond. Then choose Invest in an Insurance bond.

  • (info) NOTE: Make sure you enter the after tax rate in the 'Investment return' field.

Modelling options for Insurance bonds

By default, Pathfinder will:

  • Keep within the 125% rule for deposits (i.e. Pathfinder will never deposit more than 125% of the previous year's deposit).  If you specify deposits that violate this rule, you will get an error.

  • Apply the correct tax rates depending on whether withdrawals are made before or after the bond has been held for 10 years.

Pathfinder lets you control deposits and withdrawals separately, however some common approaches are:

Saving for a specific expense

If you are using the insurance bond to save for a specific expense, you can specify the withdrawals, and then let Pathfinder work out the schedule of deposits. To do this:

  1. For 'Deposits options' choose one of:

    1. 'Robot icon'  - This lets Pathfinder work out the deposits. The deposits will be determined by the requirements you set for withdrawals (at the next step), available cash, and whether or not it will maximise wealth in the given assumptions. Deposits will be allowed, within the 125% rule for the whole time the bond is held; OR

    2. Set year range for deposits - this is the same as the robot, but you can limit what years deposits are made (for example, you may only want to make deposits for the first five years).

  2. For 'Withdrawal options', choose:

    1. Set exact withdrawals - use the series builder to specify how much should be withdrawn and in which years.

Regular savings plan

Make regular deposits and let Pathfinder calculate the withdrawals:

  1. For instructions for deposits choose one of:

    1. Set exact deposits - use the series builder to specify the exact amounts to deposit to the insurance bond

    2. Set maximum deposits - use the series builder to specify the maximum amount to deposit.

  2. For instructions for withdrawals, choose:

    1. 'Robot' icon - if you don't have an opinion on whether the amounts should be withdrawn or when

    2. Single withdrawal - Pathfinder will close the bond and withdraw all funds in the chosen year

    3. Set year range for withdrawals - Pathfinder will make withdrawals within the chosen year range, and close the bond by the final year. It may make multiple withdrawals or a single withdrawal.

Tip for entering deposits that keep to the 125% rule

If you would like to enter a series of deposits where each deposit is 125% of the previous year's value, you can enter the first deposit, and then use the series builder to calculate the subsequent deposits:

  1. For the 'Deposit options' field, choose 'Set exact deposits'

  2. On the 'Annual deposits equal to' field, open the series builder

  3. In the series builder enter the following:

    1. Index by: Custom = 25% (note: this is 25%, not 125%)

    2. Reference year - the default is the current financial year, but you can adjust it to the first year deposits are made, if desired.

    3. In the table, for the Edit value row, find the first year you want to make a deposit, and enter the value of the first deposit

      1. This will fill in the rest of the Edit value row, with the same value. If you want to stop the deposits in a certain year, then find the year, and in the Edit row table, put '0' (zero)

    4. To see the values that will be used in the analysis, check the Indexed value (annual) row

In this example, $1,000 is deposited in the second year of analysis, then deposits that are 125% of the previous year are made for the following 4 years. The data entry is as follows:

  • Index by = 25%

  • Reference year is the second year of analysis (2018/19) to match the year of the first deposit, so the actual value of the deposit is $1,000.

  • In the 'Edit value' row, put $1,000 in the second year

  • In the 'Indexed value' field, you can see that the deposits are: $1,000, $1,250, etc. These are the values that will be used in the projections.

Specifying deposits

You can specify deposits if:

1. It is a new insurance bond

2. It is an existing insurance bond where the 'previous year deposit' field (at the 'Current situation > Assets & Loans' step) is not zero. (If the previous year's deposit is zero, then the 125% rule means that no more deposits can be made, so Pathfinder will not let you set further deposits).

Results for Insurance bonds

For an overview, see Insurance Bond results.

Related items

Strategy Development Service (SDS) and Background adjustment options

If the case includes complex analysis that you are not able to do in Pathfinder yourself, Optimo Support may be able to do some background adjustments to help you get the results you need. Depending on the complexity, this may be included as part of the standard support or additional charges may apply. For more details, please see Modelling outside the scope of Pathfinders' standard modelling.

Some examples of things that are outside the scope of Pathfinder's modelling and how Optimo support can help, are listed below:



Information required by Optimo Support

Examples where additional charges may apply

Making a partial withdrawal from an insurance bond before it has been held for 10 years.

Before 10 years, Pathfinder can make a full withdrawal; and, after 10 years, Pathfinder can do both partial or full withdrawals.

Please send us specific details, and we can see what we can do.

Depending on the case complexity, you may need to submit the case to the Optimo Financial SDS

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