The Problem with Investing in a Whole of Life Bond for Australian Expats

The Problem with Investing in a Whole of Life Bond for Australian Expats – When living abroad, financial management becomes paramount, especially when considering long-term investments.

Among the array of investment vehicles available, whole of life bonds often emerge as an option. But for Australian expats, there are various concerns to consider before diving into these investment waters.


What is a Whole of Life Bond?


A whole of life bond, often termed as an investment bond or with-profits bond, is a long-term investment product offered by insurance companies.

The bond combines life assurance with investment growth, meaning the policy pays out upon the death of the insured or after a specified term.

The returns are usually derived from a diverse mix of assets such as shares, property, or bonds.


Potential Issues for Australian Expats


Tax implications


One of the primary concerns for Australian expats is the tax treatment of overseas investments. Australia taxes its residents on worldwide income, but non-residents are only taxed on Australian-sourced income.

Depending on the country of residence, the tax treatment of whole of life bonds might be less favourable than within Australia.

Double tax treaties can further complicate matters. Understanding these implications is crucial before making any investment decisions.


Currency risk


Investing in a bond denominated in a foreign currency exposes the investor to currency risk. If the Australian dollar appreciates relative to the bond’s currency, it can erode returns when converted back to AUD.


Regulatory Differences


Financial products and regulations vary widely across countries. The guarantees, protections, or compensations that Australian investors are accustomed to might not exist elsewhere.

It’s vital for expats to familiarise themselves with the regulatory environment of their host country and understand the risks involved.

These type of products have also not been sold in the form they are sold to expats in highly regulated financial markets like Australia and the UK for over 20 years due to how punitive they are to the consumer.

Usually the only markets where you see these pushed are the Middle East and Asia.


Fees and Charges


Whole of life bonds can come with higher fees and charges. Exit fees, in particular, can be exorbitant if you decide to withdraw your investment earlier than the stipulated term.


Lack of Flexibility


Life circumstances change, especially for expats who may move between countries or return to Australia. Whole of life bonds often lack the flexibility needed to accommodate such dynamic lifestyles.

Early withdrawal may attract penalties or lead to a loss of potential returns.


Market Risk


Like all investment products, whole of life bonds carry a degree of market risk. The underlying assets’ performance will influence the bond’s value, meaning the returns aren’t guaranteed.


Alternatives to Consider


Given the potential pitfalls of whole of life bonds for Australian expats, it’s worth considering alternatives:


  • International savings accounts: Some international banks offer savings accounts tailored for expats, providing a secure place for your funds with competitive interest rates.
  • ETFs & Mutual Funds: These offer diversified exposure to a range of assets and are generally more flexible than whole of life bonds.
  • Property: Investing in real estate, either in Australia or abroad, can provide stable long-term returns.


Engaging with a financial adviser familiar with Australian expatriate challenges can be invaluable. They can help tailor investment strategies to suit individual needs and navigate complex cross-border tax issues.




While whole of life bonds might seem attractive at first glance, Australian expats should tread carefully. The combination of tax implications, currency risks, potential higher fees, and regulatory differences makes them a less than ideal option for many.

Before making any investment decisions, it’s essential to conduct thorough research and seek expert advice. Making informed choices can ensure that your financial future remains secure, no matter where in the world you choose to call home.

Like this article?

Share on Facebook
Share on Twitter
Share on Linkdin
Share on Pinterest