Investment bonds are lump-sum investments with insurance providers. You will get some life assurance with these products, but it is usually a minor part of the product. They should not be mistaken for fixed-term deposits (often called 'bonds'), from banks and building societies.

Investment bonds are sometimes known as insurance bonds or with-profit bonds.

The investment bonds to be included in our tables are 'unit-linked' and 'with-profits' bonds. The tables do not cover distribution bonds, guaranteed equity bonds, guaranteed growth bonds and guaranteed income bonds.

How does an investment bond work?

Investment bonds can offer you different ways to invest your money. The two main investment options are unit-linked and with-profits. Both work by taking your money and placing it in a 'fund', together with money from other investors. The fund is then invested on your behalf in stocks and shares, government bonds, property, cash and other investments.

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Unit-linked funds are divided into units. Your payments buy a certain number of units in the fund you have chosen. There is usually a choice of funds available, offering a range of different types of investment and different levels of risk. The unit-linked funds illustrated in the tables are known as 'managed funds'. These funds are spread across different types of investment, instead of concentrating on just one type.

Unit-linked funds are likely to give more variable returns than with-profit funds, as the value of your units will rise and fall in line with the value of the underlying investments.

With-profit funds are designed to smooth those ups and downs. The fund pays bonuses to reflect the stockmarket returns of the fund. In good years, when investments do well, the bonuses will reflect much of that performance. But some of the returns will be kept back so that bonuses can be paid in years when investments don't do so well. This smoothing prevents large swings in the levels of bonuses from year to year. The level of future bonuses is not normally guaranteed: they can be lower than previous ones or in some years they may not be paid at all. But once bonuses have been added, they can't be taken away.

When choosing a fund, you will need to consider how long you would like to invest for and the level of risk you are prepared to take with your money.

Most investment bonds do not have a specified term or end date. Usually your money remains in the fund for as long as you want it to. Once payments have been made into an investment bond, you can make partial withdrawals from your fund.

With-profits bonds are usually whole life contracts. If you want to withdraw your money earlier, you may have to pay a penalty.