Which statement is true about a life assurance bond?

A life assurance bond typically refers to an investment product that combines life insurance with an investment component. One key aspect of such bonds is how they are classified for tax purposes, particularly in relation to premium payments and the duration of the investment.

The statement indicating that a life assurance bond cannot be classified as qualifying due to a single premium is correct because life assurance bonds are often subject to specific tax treatments based on the type of premium payment made. Single premium bonds, which are funded by a one-time investment, do not usually meet the qualifying criteria for certain tax benefits. In contrast, bonds funded by multiple premium payments can be deemed qualifying, allowing for different tax implications.

Understanding this distinction is crucial because it affects how the returns on the bond will be taxed. Qualifying bonds can provide tax advantages, while those that do not qualify, such as single premium bonds, may be subject to immediate or more stringent tax treatments.

Overall, the classification of life assurance bonds hinges significantly on the structure of premium payments, which revolves around the eligibility for specific tax reliefs and implications under current tax law.