Some funds provide an optional regular income facility for the investor which is essentially an automatic redemption facility for units. Such facilities can be established to provide a monthly or quarterly 'income' for the investor. It should be noted here however, that for NZ tax residents, receipt of proceeds from the sale of units in an insurance bond is not taxable in the hands of the unit holder. As these funds are insurance policies, in the event of the insured person's death the value of the bond is paid out to the estate or the bond owner. Note that the bond owner can be different from the person insured under the policy.
Some bonds provide an additional death benefit above the investment value of the bond.
For most investors these look the same as insurance bonds although more singular in their purpose. The main objective is to provide a lump sum for the investor upon retirement which can then be re-invested to provide a regular income. They are generally unitised and investment management and fee structures tend to be similar to unit trusts. Lock-in' features are another option and are designed to prevent the investor inappropriately accessing their nest egg before retirement Broadly speaking, taxation treatment of these funds is similar to that of insurance bonds in that tax is paid by the fund . These funds are established under the Trustee Companies Act and as such can only be offered by statutory trustee companies.