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Frequently asked questions (FAQs)

Answers to the most popular questions

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1. What is a mutual bonus and why do we pay one?

The mutual bonus scheme is designed to reward eligible members for their ownership of LV= and the risks taken in supporting the establishment and growth of our trading businesses in life and general insurance.

2. How does it work?

  • The mutual bonus will be used to increase the value of eligible policies. Currently only with-profits polices invested in the LVFS with-profits fund are eligible for a mutual bonus, however for Flexible Guarantee Bond 3 and Flexible Guarantee Funds 2 the mutual bonus declared is expected to be zero. However this does not mean that these plans will never receive a mutual bonus
  • Most eligible policyholders will receive the mutual bonus when their policy matures or is cashed in
  • For With Profits Pension Annuity and Pension Income Plus Annuity policies, the mutual bonus will increase the income payable to the policyholder alongside the normal annual bonus allocation.
  • However the scheme could evolve over time. See question 5.

3. How much is the 2016 mutual bonus worth?

  • Our fifth mutual bonus declaration of £17 million was based on the financial performance of the LV= group for 2016. As a result eligible policyholders benefit from a further 0.5% mutual bonus uplift within their with-profits payouts.
  • It will typically add £50 to an eligible with-profits policy currently worth £10,000 and will ordinarily form part of the amount payable when the policy matures or is cashed in (eligible annuitants will receive an increase in their income). It will be on top of the existing regular and final bonuses which our with-profits members already receive.

Here is a summary of our mutual bonus declarations.

Mutual bonus declaration

Uplift to payouts

2011

£18.6m

1.0%

2012

£20.9m

1.1%

2013

£22m

1.0%

2014

£24m

1.0%

2015

£27m

1.0%

2016

£17m

0.5%

4. How do you see the scheme evolving?

  • Each year our board will consider the financial performance of the LV= group’s trading businesses, along with the group's current and projected financial strength, to determine:
    - whether, at what level and in what form we should declare any mutual bonus, and
    - which members are eligible to receive the mutual bonus.
  • Future mutual bonuses will be linked to our business performance and will be declared at the sole discretion of our board.
  • We intend to declare a mutual bonus in years when both trading profits and financial strength allow. We also want to consider other ways that can reward our members more generally for their investment in LV=.
  • We can’t guarantee that we’ll be able to announce a mutual bonus every year, as it will depend on our future trading profits and financial strength.

5. Once you've declared a mutual bonus, can you ever take it away?

  • Yes, but we'd only take it away in exceptional circumstances, for example if it were required to protect our financial strength.

6. I am a Flexible Guarantee Bond/Flexible Guarantee Funds policy holder, am I eligible for mutual bonus?

As a Flexible Guarantee Bond/Flexible Guarantee Funds policyholder you are eligible to receive mutual bonus on your plan. However, for Flexible Guarantee Bond Series 3 and Flexible Guarantee Funds Series 2 the mutual bonus declared is currently expected to be zero, particularly for policies that have not been in force for many years.

7. I am an RNPFN policyholder. Why aren't I eligible to receive the mutual bonus?

  • RNPFN with-profits members do not invest in the LVFS with-profits fund and did not contribute to the growth of the group’s trading businesses. Instead they are part of a separate, ring-fenced fund. Eligible policyholders in the RNPFN Fund may benefit from the distribution of the inherited estate of the Fund in the form of ‘terminal bonus enhancement’.

8. I am a Teachers Assurance with-profits policyholder. Why aren't I eligible to receive the mutual bonus?

Teachers Assurance Fund with-profits members do not invest in the LVFS with-profits fund and did not contribute to the growth of the group’s trading businesses. Instead they are invested in the separate, ring-fenced Teachers Assurance Fund. Policyholders in the Teachers Assurance Fund may benefit from the distribution of the inherited estate of the Fund in the form of ‘special bonus’.

9. What about future years? Will it always only be LVFS with-profits members who receive mutual bonus?

No. The LV= board will consider each year whether, at what level and in what form LV= will declare any mutual bonus, and which members are eligible to receive it.

10. Why aren't all customers eligible to receive the mutual bonus?

As we are a mutual company, we're owned by our members, in much the same way as a plc is owned by its shareholders. A member is a person who holds life insurance, protection, investment or retirement policies with us. For more details see the members section. The mutual bonus is designed to reward our members for their ownership of LV=, and the risks taken supporting the establishment and growth of our trading businesses in life and general insurance however, we will continue to assess the appropriate rewards for our members and this may change.

Want to find out more?

  • You can phone one of our people on 0800 085 4499.
  • This phone line is available from 8.30am to 6.30pm on weekdays.
  • For TextDirect dial 18001 first.
  • We may record and/or monitor your calls for training and audit purposes.