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Protected Retirement Plan

Customer death benefits

Is your client worried about passing away before the end of their plan? They can choose to buy one or more of our optional death benefits at the start of the plan. There are three of these options and they are outlined below:

Allows your client to protect the plan for their chosen beneficiary.

  • They can choose to let their spouse, civil partner or chosen beneficiary inherit the plan when they die.
  • The surviving beneficiary will receive an income equal to the chosen percentage of the plan income until either the end of the plan or until they pass away.
  • If the beneficiary survives until the end of the term, we'll pay out the chosen percentage of the maturity value.
  • Can be combined with either a guaranteed period or a value protection death benefit.
  • They can protect their income for a set period and if they pass away during this time, the remaining income will be paid as a lump-sum.
  • If their plan includes a beneficiary’s income benefit and if the qualifying beneficiary is still alive when they pass away, the income will continue to be paid at the full amount until the end of the guaranteed period. If the beneficiary is still alive at the end of the guaranteed period, the beneficiary’s income benefit will then be paid.
  • If their beneficiary passes away within the guaranteed period, the remaining income will be paid as a lump-sum.
  • This option cannot be combined with Value Protection.
  1. Your client can protect up to 100% of their original investment if they pass away within the plan term.
  2. The lump-sum payable will be the initial amount used to purchase the Protected Retirement Plan (or they can choose to protect a proportion of this amount), less the total amount of income paid.
  3. If the plan includes a beneficiary’s income benefit and if their beneficiary is still alive when they pass away, the beneficiary’s income will be paid first. This means that the lump-sum will only be payable where both the client and their beneficiary die during the plan term.
  4. This option cannot be combined with a guarantee period.

Taxation

  • If your client dies before age 75, any death benefits will normally be paid tax-free. If they die at age 75 or older, the beneficiary will pay income tax at their personal rate.
  • If the beneficiary chosen to receive a beneficiary’s income isn’t a spouse or civil partner, the benefit payable may be subject to inheritance tax. This is because we do not retain discretion on who to pay.
  • In addition, if your client transfers an existing pension into this plan and they know that they're in serious ill-health when they do so, should they die within two years of the transfer this amount could become liable to inheritance tax.

Tax treatment depends on your client's personal circumstances. Any references to taxation are based on our understanding of current legislation and HM Revenue & Customs practice, which can change.

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FOR UK FINANCIAL ADVISERS ONLY
LV=, County Gates, Bournemouth, BH1 2NF, UK