LV= uses cookies to give you the best experience online and to provide anonymised, aggregated site usage data. You can find out what cookies we use and how you can disable them in our Cookie Policy. By continuing to use our website, you agree to our use of cookies in accordance with our cookie policy unless you have disabled them.

skip to main content

Protecting the value of your annuity

Value Protection allows you to protect all or part of the fund used to buy your annuity if you die. The amount paid depends on when you die and whether you’ve chosen for a beneficiary to receive your annuity payments.

If you haven’t chosen a beneficiary’s annuity, when you die your annuity provider will firstly add up all the income payments paid to you before tax. If this is less than the amount of value protection you chose we will pay the difference as a lump sum.

If you have chosen a beneficiary’s annuity as well as value protection, when you die, your annuity provider will wait until your beneficiary also dies, and then add up all the income payments paid to both of you before tax. Similarly, if this is less than the amount of value protection you have chosen, your annuity provider will pay the difference as a lump sum. If you die before age 75, the amount paid to your nominated beneficiary will be tax-free.

If you die aged 75 or older from tax year 6th April 2017 onwards, the amount paid will be taxed at the nominated beneficiary’s personal rate of income tax.

How value protection works - Jean's story

Jean bought an annuity with £50,000 in 2015. Jean passed away aged 75 having received a total of £4,000 income by this time. As she had chosen to have full value protection, a payment of £46,000 would be made.

Any reference we make to taxation are based on our understanding of current legislation and HM Revenue & Customs practice, which can change.

Have a commitment free chat with a Pension Specialist

Call us on 0800 032 9301

TextDirect: First dial 18001

Lines open: 9am to 6pm Monday to Friday. We may record and/or monitor calls for training and audit purposes.

Start your conversation with a pension specialist today by telling us about:

  • Your current pension pots
  • Any contributions you're making
  • How much you've already saved