Friends Provident is launching a high yield bond with an anticipated income of 8.8 per cent a year.
The bond is available as a maxi Isa allowing investments up to £7,000 in the tax year ending to April and as a mini Isa allowing a maximum investment of £3,000.
The bond has a minimum single contribution of £1,000 and allows additional investments of £500.
Investors may receive regular income payable quarterly at the end of January, April, July and October or it can be rolled back into the fund.
The fund has an initial four per cent charge and an annual management charge of one per cent.
It invests across a range of fixed instrument investments including gilts, non-UK Government bonds and corporate bonds.
Friends Provident managing director retail operations Tony Barnes says: “With the interest rates offered by the majority of bank and building society deposit accounts at such low levels, the search for alternative forms of income generating investments becomes increasingly important.
“The new high income bond Isa has the potential for paying much higher levels of income than a traditional deposit and will pay this free of tax.”