The Board will consider several factors when deciding how much exit bonus will be applied to policies in any one year. This will include what funds are still available, how investment markets perform, the number of active members who are eligible to receive it and our current and projected financial strength.
The exit bonus is a percentage increase in the final policy value, which can vary so it’s not guaranteed. However, we won’t add an exit bonus to any eligible policies when guaranteed benefits, or the underpin on conventional pension benefits paid as lump sums, are payable.
We’ve decided to reward LV= with-profits policyholders who have been with us for many years, particularly during the period of time when we were growing the General Insurance business, and in doing so were exposed to the most risks during that time. In deciding who receives the bonus, the LV= Board took advice from the LV= With-Profits Committee and the LV= With-Profits Actuary.
However, we won’t add an exit bonus to any eligible policies when guaranteed benefits, or the underpin on conventional pension benefits paid as lump sums, are payable.
Any exit bonus will be added to your policy value when your policy ends, or you start receiving an income from the policy. Alternatively we’ll use the exit bonus to reduce the number of units we cancel when you make a partial withdrawal on your unitised product.
However, we don’t add an exit bonus to any eligible policies when guaranteed benefits, or the underpin on conventional pension benefits paid as lump sums, are payable.
You won’t notice any difference to the income due to the exit bonus. This is because we would begin paying guaranteed yearly income benefits, and we don’t add an exit bonus to these types of benefits.
We aren’t paying any more than your guaranteed benefits, as the amount of money you’ll receive from your annuity is more than the value of the investments it’s paid from, and this is likely to continue.
We don’t add an exit bonus to guaranteed benefits where they are a fixed amount. So if these are higher than the underlying value of your policy including the exit bonus, then you won’t benefit from the exit bonus. However you would be benefitting from the guaranteed benefit.
Further information can be found in your guide to how we manage our with-profits business.
In normal circumstances, these bonuses will be protected from most business risks. The actual rates we declare will be influenced by what funds are still available, how investment markets perform, the number of active members who are eligible to receive it and our current and projected financial strength.
We must protect LV= and look out for the interests of all our members. Therefore, if in the unlikely event that our financial strength was to reduce to an unacceptable level the bonus rates could drop below the levels we're aiming for. We don’t think this is likely to happen, but we think it’s important to be upfront about this possibility.
In these circumstances, we currently expect to reduce the exit bonus first and then we’d look at potentially reducing the mutual bonus.
No, this isn’t possible. If you have an existing policy in place the exit bonus will only be added at the point that your policy matures, is cashed in, pays out a death claim, or you start to receive money from the policy – either through partial withdrawals on unitised policies (where the exit bonus reduces the units we cancel) or a regular income.
It is not possible to substitute this for a cash amount before the policy ends. We don’t add an exit bonus to any eligible policies when guaranteed benefits - or the underpin on conventional pension benefits paid as lump sums - are payable.