Value Protection
Since 6th April 2006, it has been possible for an annuity to provide a return of capital on the death of an annuitant. This facility is known as Value Protection.
Value Protection is a way of protecting the value of an annuity should your client die earlier than expected.
How it works
Your client chooses at outset whether to protect the full value of their annuity or just a proportion of it.
The maximum lump sum payable under Value Protection is the initial annuity purchase price, less the sum of the income paid from the annuity. Any Value Protection lump sum payable is taxed at source at a rate which is currently 55%. Where possible we will pay this using our discretion, which may help to avoid any additional inheritance tax charge.
A dependant's annuity may also be paid. In this case, any Value Protection lump sum will be paid on the 2nd death, and will take into account the total amount of income paid to both the annuitant and the dependant.
Any references we make to taxation are based on our understanding of current legislation and HM Revenue & Customs practice, which can change.
Who could benefit from Value Protection?
- Clients concerned about losing out on their pension fund on early death, particularly those in ill health.
- Clients more interested in lump sum death benefits than annuity income
- Risk averse Clients who want a guaranteed income stream and the reassurance of a lump sum death benefit if they die
The cost of Value Protection
The cost of Value Protection varies by individual, and depends on a number of factors, including the annuitant's age and state of health. To see what this means for your client, please phone our quotes team on 0800 169 1111. For textphone dial 18001 first, 8.30am to 5.30pm Monday to Friday. We may record and/or monitor your calls for training and audit purposes.