Member bonuses

Double the LV= difference

Giving back to members

When we do well, we can give our members something extra

  • Since 2011 we’ve given back to eligible members by awarding a percentage uplift to the value of any eligible policies they have with us. We call this the mutual bonus.
  • In 2020 we launched another bonus too. We’ll be giving eligible members a percentage uplift when their policy ends or they begin taking an income from it. We’re calling this the exit bonus.
  • This page explains more about what both these bonuses are and who is entitled to receive them. We’ve also created a space to answer any questions you might have.

At the end of 2019 we completed the sale of our general insurance business to Allianz

Our general insurance (GI) business sells award-winning car and home insurance and other policies to help people insure the things they love. We wouldn’t have been able to build such a successful GI business without the support of certain long-standing members. So we want to say thank you to them by giving back some of the sale proceeds through a new bonus scheme.

More about the sale of the general insurance business

Our thank you

We’re saying thank you in two ways

If you’re entitled to the bonuses, you don’t have to do anything, we’ll add them to your policy at the right time.

We aim to maintain the mutual bonus for years to come

Every year since 2011, we’ve announced a mutual bonus for eligible members. So far we’ve given a total of £237million to these members and we want to continue to give them a mutual bonus for years to come. 

The percentage we award for the mutual bonus depends on the type of policy. The most recent percentage values declared for the mutual bonus are as follows:

Policy Group Uplift % 2020

LV= conventional with-profits policies

With-profits annuities 

 1.0%

LV= accumulating and unitised with-profits policies
(except Flexible Guarantee policies) 

 1.0%

Flexible Guarantee Bonds Series 1 & 2

Flexi Guarantee Plan

Flexible Guarantee Funds Series 1 

 0.5%

Flexible Guarantee Bonds Series 3

Flexible Guarantee Funds Series 2 

 0.2%

For members who have recently received mutual bonuses of 1.0% or 0.5%*, we want to use some of the proceeds from the sale of the GI business to keep mutual bonuses at similar levels going forward. This means that from 2020 onwards whether or not a mutual bonus is given will be based on things such as; 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.

*This doesn’t include our Flexible Guarantee Bonds Series 3 or Flexible Guarantee Funds Series 2 policies, which since 2018 have received a mutual bonus of 0.2%. The decision to declare a mutual bonus for this group will still be based on factors like the performance of our trading businesses, as well as other things. We won’t specifically use the GI sale proceeds towards maintaining these bonuses. More on this can be found in the mutual bonus FAQs. 

We also want to give you an exit bonus on top

When your eligible policy comes to an end, or you begin to receive money from your policy, we also want to give you another bonus on top of any annual mutual bonus. This is the exit bonus, and our aim is to add it to your policy value when 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. However, we don’t add the exit bonus if we are already paying guaranteed benefits, or when  the underpin on conventional pension benefits is paid.

In the same way as the mutual bonus, the rate of the exit bonus will be reviewed regularly and may go up or down. We’ll add the percentage uplift to the final value of any eligible policies that come to an end, unless we are paying guaranteed benefits, or when the underpin on your conventional pension benefits is paid. 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, or add it to regular income you receive from any eligible policy.

These bonuses aren’t guaranteed. It’s important for us to ensure that LV= and our members’ interests are always protected. So for example, in the unlikely event that our financial strength was to reduce to an unacceptable level, the exit bonus and mutual bonus could drop below the levels we’re aiming for, or could be removed. We don’t think this is likely to happen, but it’s important for us 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.

Eligible members

The bonuses will only be added to certain policies

The board have chosen to reward members whose policies made the biggest contribution to the growth of the GI business, and in doing so were exposed to the most risks during that time.

Here’s a list of eligible policies

Policies that are eligible for both the mutual bonus and the exit bonus:

  • LV= Conventional with-profits policies and with-profits annuities
    • IB & OB conventional with-profits whole of life policies
    • IB & OB conventional with-profits endowment policies
    • OB conventional with-profits low cost endowment policies
    • OB conventional with-profits pensions (before retirement)
    • OB conventional with-profits pensions (annuity in payment)
    • With Profits Pension Annuity
    • Pension Income Plus Annuity
  • LV= Accumulating and unitised with-profits policies (except Flexible Guarantee policies)
    • LV=  Savings and whole of life policies
    • Flexible Whole Life policies 
    • Tax Free Savings Plan
    • Flexible Savings Plan
    • Mortgage Savings Plan
    • MAX
    • Regular Savings Plan
    • Family & Legacy Fund
    • With Profits Life ISA
  • LV=  Pensions:
    • Appropriate Personal Pension policies  
    • Flexible Personal Pension Plan
    • Top-Up Company Pension Plan
    • With Profits Retirement Plan
  • LV=  Bonds:
    • Flexible Investment Bond
    • Mutual Investment Bond
    • With Profits Growth Bond
    • With Profits Investment Bond
    • With Profits Income Bond
    • Bank of Ireland Bond
    • All-in-1 Investment Bond
    • Guaranteed Capital Bond

Policies that are eligible for the mutual bonus only:

  • LV=  Policies that are only eligible for the mutual bonus:
    • Flexible Guarantee Bond     
    • Flexible Guarantee Bond Series 2 
    • Flexible Guarantee Bond Series 3*
    • Flexi Guarantee Plan 
    • Flexible Guarantee Funds (aka Flexible Guarantee Trustee Investment Plan)
    • Flexible Guarantee Funds (aka Flexible Guarantee Trustee Investment Plan) Series 2*

*The decision to declare a mutual bonus for these types of policies will still be based on factors like the performance of our trading businesses, smoothing profits and losses and our current and projected financial strength. We won’t use the GI sale proceeds towards maintaining these bonuses. More on this can be found in the mutual bonus FAQs.

Current Exit Bonus Rate

When eligible policies end, they’ll currently receive an exit bonus of 4.75%

The exit bonus rate is reviewed annually by the LVFS Board in January of each year, but it can be reviewed at other times if there is a need to. They consider factors, when deciding what rate to apply – including 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.

Once the new rate has been agreed, it will then be used to uplift pay-outs and income for eligible policies, typically from the following 1st March. We’ll publish this rate on our website on or shortly after this date. 

The Board declared an initial exit bonus rate of 5.75% in 2020 and this was maintained at the review in January 2021. 

The funds for exit bonus are currently invested in cash based assets, so strong investment returns increase the policy values over which the funds for exit bonus have to be spread and therefore tend to reduce the percentage of exit bonus payable.

 

Following particularly strong investment returns in late 2020 and early 2021 in the fund eligible policies are invested in, an exit bonus rate of 5.0% was declared, from 1 June 2021. A further review has been conducted following continued strong performance over the course of 2021 and an exit bonus rate of 4.75% has been declared to take effect from 1 September 2021.

This rate will continue to be used to uplift payouts and income for eligible policies until the next rate is declared, which would be on 1st March 2022 unless there is a need to review it earlier.

Where pension income is being uplifted, the rate of exit bonus will be the current rate on the anniversary of when the policy started. The level of the income will then not change for a year.

We don’t add the exit bonus if we are already paying guaranteed benefits, or when the underpin on conventional pension lump sum benefits is paid.