Money questions and answers

I have long suggested that insurance bonds are the perfect investment for children and grandchildren because there is nothing to declare on anybody's tax return each year as the earnings accrue as bonuses. Furthermore, at any stage the bond can be transferred to the child free of capital gains tax. An insurance bond is a tax paid investment with the fund paying tax at up to 30 per cent on your behalf.

A good example is Generation Life's ChildBuilder insurance bond which can be a great way to create wealth for your children for a specific purpose. You may want to provide for their education, help them buy a home or both. ChildBuilder can help you do this in a tax-effective way, while still remaining flexible enough to adapt to life's unexpected moments.

While insurance bond funds are taxed at a maximum of 30 per cent, the ChildBuilder's long-term effective tax rate may be much lower depending on the investments you select. A financial adviser can help you select the most appropriate bond.

I am a full-time carer for my wife and have reached age pension age. Is there any financial benefit for me if I take the age pension and can I receive both the age pension and the career's pension?

Regan Welburn of My Pension Manager says the carer payment and the age pension are assessed under the same tests and the payment rates are the same. You can't have both so you will need to decide which one is the most appropriate. The age pension is easier to claim as you only need to be pension age (along with meeting the residency and means testing requirements).

The carer payment is more restrictive when it comes to overseas travel and time away from the person you are caring for. However, the carer payment comes with an additional supplement of $600 a year, paid in the first fortnight of July each year.

What most people don't realise is that there's an additional payment called the carer allowance. This can be paid in addition to your age pension (or carer payment) and is a flat $144.80 a fortnight. Those in receipt of the carer allowance will also receive the $600 a year carer supplement.

Generally, the "sweet spot" for most Australians is claiming the age pension and the carer allowance. That strikes the balance between having the flexibility of the age pension but receiving an additional $4364.80 a year from the carer allowance and supplement.