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Over 50s life insurance

Over 50s life insurance

An over 50s Plan is a very simple way to leave your loved ones a fixed cash sum after you’re gone. This could help towards funeral expenses, outstanding household bills or simply as a nest egg for your children or grandchildren.

Where the cash sum is fixed, inflation will reduce its value over time. Depending on how long you live, the cash sum paid out could be less than the total amount paid in premiums. The Plan has no cash in value – if you stop paying your premiums, your cover would end and you wouldn’t get anything back.

Phoenix Customer Care are pleased to be able to introduce you to LV, the UK’s most recommended insurer* who can provide you with over 50s life insurance.

Get in touch for more information

*Research from YouGov Brand Index using ‘Recommend’ measure conducted online between November 2013 and October 2014, sample size 35,384. For more information go to LV.com

Jargon buster

We recognise that this industry is full of jargon. To make it less confusing for you, our jargon buster helps explain financial terms and phrases.

active member (of a pension scheme)
additional bonus
additional rights
Additional Voluntary Contributions (AVC)
administrator (for a deceased person's estate)
adviser
age-related rebate
allocation rate
Alternatively Secured Pension (ASP)
annual allowance (pension)
annual allowance charge
annual bonus
Annual Management Charge (AMC)
Annual Percentage Rate (APR)
annuitant
annuity (policy)
annuity escalation
annuity guaranteed period
annuity rates
asset allocation
asset class
asset mix
assets
assign / assignment / assignation / assignee
Association of British Insurers (ABI)
assumed final bonus
assumed regular bonus
authorised payment
BACS
Bank of England base rate
basis amount (pensions)
beneficiary (beneficiaries)
bid / offer spread
bid price
blood relative
bond
bondholder
bonus
bonus units
capital gain
capital gains tax
capital units
capped drawdown
carry forward (pensions)
cash in value
chain of succession
chargeable event
charges
civil partner
claimant
closed life funds
commission
compound interest
confirmation (Scotland)
consolidator (of closed life funds)
Consumer Price Index (CPI)
contracting out
conventional with profits
conventional with-profits
critical illness
Crown copyright
Customer Friendly Principles and Practices of Financial Management (CFPPFM)
Customer Impact Scheme
daily bonus
Data Protection Act 1998
death benefits
decreasing term
deed poll
deed of assignment
deferred benefits
deferred period
defined benefit (pension scheme)
defined contribution (pension scheme)
demutualisation
dependant
dependant’s pension
direct debit
disclosure of costs
diversification
drawdown pension
emolument
endowment assurance / policy (with-profits)
endowment assurance / policy (with profits)
enhanced allocation rate
enhanced annuity
enhanced protection (pensions)
equities
Equity Backing Ratio (EBR) of a with-profits fund
Equity Backing Ratio (EBR) of a with profits fund
equity release
escalating annuities
estate (of a deceased person)
estate (with-profits funds)
estate (with profits funds)
Estimated Maturity Value (EMV)
exclusions
executor
executor dative (Scotland)
executor nominate (Scotland)
final bonus
final salary pension scheme
Financial Conduct Authority (FCA)
Financial Ombudsman Service
fixed interest securities
fixed protection (pensions) 2012
fixed protection (pensions) 2014
fixed protection (pensions) 2016
flexi access drawdown
Free Standing Additional Voluntary Contributions (FSAVC)
FRS17 (Financial Reporting Standards)
FTSE (Financial Times Stock Exchange) / FTSE 100 / FTSE All-Share
fund
fund manager
fund value (of a pension)
General insurance
guaranteed bonus
guaranteed cash sum
guaranteed fund
Guaranteed Annuity Option (GAO)
Guaranteed Annuity Rate (GAR)
guaranteed growth bonds
guaranteed income bonds
guaranteed investment bond
guaranteed minimum death benefit
Guaranteed Minimum Pension (GMP)
hedge funds
HM Revenue & Customs (HMRC)
illustration
impaired life annuity
income protection
income tax
increment
independent financial adviser
index-linked
index tracker
individual protection 2014
individual protection 2016
Individual Savings Account (ISA)
industrial branch
inflation
inheritance tax
initial units
intermediary
intestate
investment performance
investment return
joint life
land register
lapse / lapsed
Letter Of Authority (LOA)
letters of administration
level term assurance
life cover
Life Assurance Premium Relief (LAPR)
life assured
life expectancy
life insurance
lifetime allowance charge (pensions)
lifetime annuity
Limited Price Indexation (LPI)
low cost endowment
Market Level Adjustment (MLA)
Market Value Adjustment (MVA)
Market Value Reduction (MVR)
maturity
maturity bonus
money purchase (pension scheme)
Money Purchase Annual Allowance (MPAA)
mortgage deed
mortgage endowment
national insurance rebates
National Treasury Management Agency (NTMA)
national insurance contributions
net income
net interest
next of kin
nominated beneficiary
non forfeiture
non-protected rights
non-qualifying policy
Normal Retirement Date (NRD)
Notary Public
occupational pension scheme
offer price
Ombudsman
Open Ended Investment Companies (OEICS)
open market option
ordinary branch
ordinary rights
overlap
paid up
payment increase
payment in kind
pension commencement lump sum
Pension deficit
pension income
pension liabilities
pensions input
Pensions Input Period (PIP)
Permanent Health Insurance (PHI)
personal lifetime allowance (pensions)
personal pension
personal rights
plan
planholder
Policies
policy
policy charge
policy fee
policyholder
policy terms and conditions
Policy Value Adjustment (PVA)
Power of Attorney (POA)
premium
premium holiday
primary protection (pensions)
Principles and Practices of Financial Management (PPFM)
private medical insurance
probate
Probate Registry of the High Court
product provider
Projected Maturity Value (PMV)
projection
proposal
proposer
protected rights
protected rights annuity
protected rights fund
Prudential Regulation Authority (PRA)
Qualifying Recognised Overseas Pension Scheme (QROPS)
qualifying policy
Q&As
quotation
redemption penalties
reduction in yield
registered civil partner
registered pension scheme
regular bonus
remuneration
renewable term insurance
repayment mortgage
Retail Prices Index (RPI)
Retirement Annuity Contracts (RAC)
reversionary bonus
reversionary pension
S2P (State Second Pension)
schedule
scheme administrator
scheme insurer
scheme member
scheme pension
Scottish Rate of Income Tax
sealed copy
selected benefit date (SBD)
self-proposed
serious ill health lump sum
shareholder
shares
Sheriff's Court
short term annuity
single payment
single-tier state pension
Small pot payment
smoothing
spouse
spouse’s pension
stakeholder pension
standard lifetime allowance
standard lifetime allowance charge
standing order
state pension
state pension age
statutory money purchase illustration (SMPI)
sum assured
surrender
surrender value (SV)
tax credit
tax-free lump sum (TFLS)
temporary annuity (policy)
term
term assurance
terminal bonus
terminal illness
The State
The Pensions Regulator
third party
top-up payment
traditional with profits
traditional with-profits
transfer
transfer payment
transfer value
trivial commutation lump sum
trust deed
trust / trustee
unauthorised payment
underlying investments
underwriter
underwriting
unitised with profits policy
unitised with-profits policy
unit linked
unit-linked
unsecured pension (USP)
variable rate
voluntary rights
waiting period
waiver of premium / contribution
whole life (assurance)
whole of life (assurance)
will
winding-up lump sum
with profits plans / policies
with-profits plans / policies
with profits endowment
with-profits endowment
yearly bonus
active member (of a pension scheme)
additional bonus
additional rights
Additional Voluntary Contributions (AVC)
administrator (for a deceased person's estate)
adviser
age-related rebate
allocation rate
Alternatively Secured Pension (ASP)
annual allowance (pension)
annual allowance charge
annual bonus
Annual Management Charge (AMC)
Annual Percentage Rate (APR)
annuitant
annuity (policy)
annuity escalation
annuity guaranteed period
annuity rates
asset allocation
asset class
asset mix
assets
assign / assignment / assignation / assignee
Association of British Insurers (ABI)
assumed final bonus
assumed regular bonus
authorised payment
BACS
Bank of England base rate
basis amount (pensions)
beneficiary (beneficiaries)
bid / offer spread
bid price
blood relative
bond
bondholder
bonus
bonus units
capital gain
capital gains tax
capital units
capped drawdown
carry forward (pensions)
cash in value
chain of succession
chargeable event
charges
civil partner
claimant
closed life funds
commission
compound interest
confirmation (Scotland)
consolidator (of closed life funds)
Consumer Price Index (CPI)
contracting out
conventional with profits
conventional with-profits
critical illness
Crown copyright
Customer Friendly Principles and Practices of Financial Management (CFPPFM)
Customer Impact Scheme
daily bonus
Data Protection Act 1998
death benefits
decreasing term
deed of assignment
deed poll
deferred benefits
deferred period
defined benefit (pension scheme)
defined contribution (pension scheme)
demutualisation
dependant
dependant’s pension
direct debit
disclosure of costs
diversification
drawdown pension
emolument
endowment assurance / policy (with profits)
endowment assurance / policy (with-profits)
enhanced allocation rate
enhanced annuity
enhanced protection (pensions)
equities
Equity Backing Ratio (EBR) of a with profits fund
Equity Backing Ratio (EBR) of a with-profits fund
equity release
escalating annuities
estate (of a deceased person)
estate (with profits funds)
estate (with-profits funds)
Estimated Maturity Value (EMV)
exclusions
executor
executor dative (Scotland)
executor nominate (Scotland)
final bonus
final salary pension scheme
Financial Conduct Authority (FCA)
Financial Ombudsman Service
fixed interest securities
fixed protection (pensions) 2012
fixed protection (pensions) 2014
fixed protection (pensions) 2016
flexi access drawdown
Free Standing Additional Voluntary Contributions (FSAVC)
FRS17 (Financial Reporting Standards)
FTSE (Financial Times Stock Exchange) / FTSE 100 / FTSE All-Share
fund
fund manager
fund value (of a pension)
General insurance
Guaranteed Annuity Option (GAO)
Guaranteed Annuity Rate (GAR)
guaranteed bonus
guaranteed cash sum
guaranteed fund
guaranteed growth bonds
guaranteed income bonds
guaranteed investment bond
guaranteed minimum death benefit
Guaranteed Minimum Pension (GMP)
hedge funds
HM Revenue & Customs (HMRC)
illustration
impaired life annuity
income protection
income tax
increment
independent financial adviser
index tracker
index-linked
individual protection 2014
individual protection 2016
Individual Savings Account (ISA)
industrial branch
inflation
inheritance tax
initial units
intermediary
intestate
investment performance
investment return
joint life
land register
lapse / lapsed
Letter Of Authority (LOA)
letters of administration
level term assurance
Life Assurance Premium Relief (LAPR)
life assured
life cover
life expectancy
life insurance
lifetime allowance charge (pensions)
lifetime annuity
Limited Price Indexation (LPI)
low cost endowment
Market Level Adjustment (MLA)
Market Value Adjustment (MVA)
Market Value Reduction (MVR)
maturity
maturity bonus
money purchase (pension scheme)
Money Purchase Annual Allowance (MPAA)
mortgage deed
mortgage endowment
national insurance contributions
national insurance rebates
National Treasury Management Agency (NTMA)
net income
net interest
next of kin
nominated beneficiary
non forfeiture
non-protected rights
non-qualifying policy
Normal Retirement Date (NRD)
Notary Public
occupational pension scheme
offer price
Ombudsman
Open Ended Investment Companies (OEICS)
open market option
ordinary rights
ordinary branch
overlap
paid up
payment in kind
payment increase
pension commencement lump sum
Pension deficit
pension income
pension liabilities
pensions input
Pensions Input Period (PIP)
Permanent Health Insurance (PHI)
personal lifetime allowance (pensions)
personal pension
personal rights
plan
planholder
Policies
policy
policy charge
policy fee
policy terms and conditions
Policy Value Adjustment (PVA)
policyholder
Power of Attorney (POA)
premium
premium holiday
primary protection (pensions)
Principles and Practices of Financial Management (PPFM)
private medical insurance
probate
Probate Registry of the High Court
product provider
Projected Maturity Value (PMV)
projection
proposal
proposer
protected rights
protected rights annuity
protected rights fund
Prudential Regulation Authority (PRA)
Q&As
qualifying policy
Qualifying Recognised Overseas Pension Scheme (QROPS)
quotation
redemption penalties
reduction in yield
registered civil partner
registered pension scheme
regular bonus
remuneration
renewable term insurance
repayment mortgage
Retail Prices Index (RPI)
Retirement Annuity Contracts (RAC)
reversionary bonus
reversionary pension
S2P (State Second Pension)
schedule
scheme administrator
scheme insurer
scheme member
scheme pension
Scottish Rate of Income Tax
sealed copy
selected benefit date (SBD)
self-proposed
serious ill health lump sum
shareholder
shares
Sheriff's Court
short term annuity
single payment
single-tier state pension
Small pot payment
smoothing
spouse
spouse’s pension
stakeholder pension
standard lifetime allowance
standard lifetime allowance charge
standing order
state pension
state pension age
statutory money purchase illustration (SMPI)
sum assured
surrender
surrender value (SV)
tax credit
tax-free lump sum (TFLS)
temporary annuity (policy)
term
term assurance
terminal bonus
terminal illness
The Pensions Regulator
The State
third party
top-up payment
traditional with profits
traditional with-profits
transfer
transfer payment
transfer value
trivial commutation lump sum
trust / trustee
trust deed
unauthorised payment
underlying investments
underwriter
underwriting
unit linked
unitised with profits policy
unitised with-profits policy
unit-linked
unsecured pension (USP)
variable rate
voluntary rights
waiting period
waiver of premium / contribution
whole life (assurance)
whole of life (assurance)
will
winding-up lump sum
with profits endowment
with profits plans / policies
with-profits endowment
with-profits plans / policies
yearly bonus

A member of a pension scheme for whom contributions are being paid, and/or pension benefits are accruing.

A bonus that may be added to a with-profits policy when it is surrendered or matures. The amount of bonus paid (if any) depends on the performance of the investments (and other profits and losses of the fund) over the term of the policy and is not guaranteed. This is sometimes known as a final, maturity or terminal bonus.

The benefits built up in a money purchase pension scheme from contributions made by the policyholder or their employer.

Extra contributions paid by a member of an occupational pension scheme to provide benefits in retirement, in addition to the main scheme benefits.

If a person has died without making a will, the next of kin can apply to the Probate Registry of the High Court for letters of administration, which is a legal ‘grant of representation’ that appoints them as the administrator to deal with the deceased person’s estate. The administrator can claim the proceeds of any life and some pension policies owned by the deceased person, which are not in trust or subject to an assignment.

In Scotland, the administrator is called the ‘executor dative’ and the grant of representation is called the ‘confirmation’.

Someone who is authorised and regulated by the Financial Conduct Authority (FCA) to establish your needs and your circumstances and advise you on suitable products to meet your financial objectives. An `independent` adviser can consider and recommend all types of products from all firms across the market. A `restricted` adviser can only recommend certain products, product providers, or both.

A payment the Government made to your company pension scheme, personal pension plan or stakeholder pension if you were contracting out of the State Second Pension (S2P). The amount you received depended on your age at the start of the tax year and how much you earned. From 6 April 2012, contracting out was no longer available to members of a money purchase pension scheme, such as a personal pension. Contracting out from a defined benefits pension scheme also ended in April 2016.

For unit-linked policies, the percentage of your premium that is invested.

Until 6 April 2011, this was pension income drawn directly from money purchase pension fund by someone aged 75 or over while their fund remains invested.

The maximum amount that can be paid into a pension(s) each year and receive tax relief from the Government. This covers all the pension contributions made, not just those paid into an employer’s scheme. The annual allowance for 2017/18 is £40,000 (This is reduced further if your income is above £150,000). For money purchase contracts, this will reduce to £4,000 if you access your pension via any of the pension flexibilities introduced from April 2015.

The tax you will pay if your pension savings exceed the annual allowance. Tax is charged at your marginal rate.

A bonus that may be added to conventional with-profits policies once a year. However, the allocation of bonuses depends on the performance of the fund and we can’t guarantee that a bonus will be added every year but once a bonus is added, it cannot be taken away. For more information on annual bonuses, visit our customer centre, select your former policy provider and look in the ‘with-profits’ section.

An amount we charge each year (usually a percentage of the amount you have invested) for managing your fund.

A rate of annual interest used by lenders, which takes account of the set up and continuing costs of a loan over its entire term.

A person who receives an annuity for a specified term (a temporary annuity) or for the remainder of their life (a lifetime annuity).

When your pension policy matures, you can use the money built up in your pension fund to buy a ‘lifetime annuity’ that will give you a regular income in retirement for the rest of your life. The term annuity also refers to the regular income you receive from your annuity policy.

An annuity can increase each year, either by a fixed amount, such as 3% or linked to a measure of inflation. The rate at which an annuity will increase each year when it is being paid is known as an ‘annuity escalation rate’

Annuity policies may include a guarantee which means that the income is paid for a minimum number of years, even if you die.

The rates that determine the amount of income an annuity provides, typically for each £100 or £1,000 of fund value. Annuity rates offered by different providers vary and change regularly.

The proportion of a fund that is invested in each asset class.

The different types of asset that are included in an investment fund, for example,  property, bank (cash) deposits, company shares (equities), fixed interest stocks / bonds including bonds or securities issued by the UK Government (gilts) and loans to companies (corporate bonds).

The type of assets the fund is invested in.

Investments in a fund (see also asset mix, asset class and asset allocation).

If you assign your policy, you transfer all the rights to receive benefits and rights of the policy to a new owner (known as the ‘assignee’). ‘Assignment’ or ‘assignation’ is the act of assigning a policy.

An organisation that represents the interests of the UK’s insurance industry. The association speaks out on issues of common interest, helps to guide debates on public policy and promotes high standards of customer service in the insurance industry. Visit the ABI’s website at www.abi.org.uk

The final bonus we assume will be paid when we estimate the value of an investment.

The regular bonus we assume will be paid when we estimate the value of an investment.

Pension payments made within the tax rules that will not incur tax charges.

This stands for ‘Bankers’ Automated Clearing Services’ but is now generally only used in its abbreviated form. It is a way of transferring money electronically from one UK bank account to another. Payments take three working days to clear. They are entered into the system on the first day, processed on the second day and cleared on the third day.

The main interest rate that the Bank of England charges banks for secured overnight lending. It is used as a guide for other interest rates.

The amount on which the maximum income withdrawal from capped drawdown is based. It broadly matches the amount of income a pension fund would provide if it was used to buy an annuity.

A person or persons entitled to receive money/benefits from a policy or from a deceased person’s estate. A ‘nominated’ beneficiary is a person who is named in a policy or a person’s will to receive benefits.

In a unit-linked fund, the price you can buy units at (offer price) is usually higher than the price you can sell them at (bid price). The bid / offer spread is the difference between the two.

The price that you receive when you cash in or surrender (sell) units in a unit-linked policy.

Someone who is related to you through a common ancestor rather than by marriage or adoption, e.g. you have common parents or grandparents.

A type of policy where you pay a single premium. These policies have no fixed term (open ended) and can be surrendered at any time. We will pay the sum assured (or death benefit) when you die.

The legal owner of a bond. This may include trustees of a pension scheme.

The share of the profits added to with-profits policies.

Units that can be added to a unitised with-profits policy to increase its value.

The amount of money made if an asset (such as a building or company shares) is sold for more than it cost (the investment profit).

A tax charged on the profit made by selling assets e.g. a business, a second home or shares. Everyone is allowed to make a certain level of profit each year before capital gains tax is charged. The allowance is £11,300 for the 2017/18 tax year. The sale of your main home is exempt in most cases as you may qualify for Private Residence Relief.

Units that can be allocated to a unit-linked (or unitised with-profits) policy in the first two years (typically). There are extra charges for these units to cover the selling and set up costs for the policy.

A type of income drawdown product that was available before 6 April 2015. It allows you to take an income directly from the pension fund while leaving the fund invested. If you already use capped drawdown, you will continue under its existing rules, but if you exceed the income `cap` then you will be in `flexi access drawdown` going forward.

An option which enables you to have pension savings in a tax year which exceed the annual allowance without having to pay tax. It is only available where pension savings in one or more of the preceding three tax years were below the annual allowance. The unused allowance is carried forward into the current tax year.

The amount you might get if you surrender or cancel an investment or life insurance policy. You should think carefully before cashing in your policy. We recommend you seek independent financial advice before you do.

The order in which next of kin can apply for legal authority to handle a relative’s estate when they have died without leaving a will.

A chargeable event will normally arise on a non-qualifying policy. For example, when you cash the policy in or if the life assured dies. If a chargeable event occurs, we need to send a chargeable event certificate to you and a copy to HM Revenue & Customs. This certificate is used to work out whether you need to pay any tax in excess of the basic rate.

There are a number of ways in which companies can charge for financial services. These include allocation rate, annual management charge and the bid / offer spread.

Someone who has entered into a formal arrangement (known as ‘civil partnership’) with a same-sex partner.

A person who is claiming money/benefits from a policy or policies.

A life fund is one that contains longer-term investment policies and pensions. When a fund is ‘closed’, energy is focused on existing customers, rather than attracting new ones.

An amount of money paid to an adviser or salesperson who advises you to buy a financial product. Since the start of 2013 advisers cannot be paid commission if they give you advice about pensions or investments. They must charge you a fee for the advice. Commission can still be paid for advice on other products such as mortgages, general insurance or life assurance.

When interest is charged or earned it can be ‘simple’ or ‘compound’. Compound means that interest is also charged (or earned) on any previous interest.

In Scotland, if a person has died and their estate is in probate, their next of kin can apply to the Sheriff's Court for ‘confirmation. This is a legal document that appoints them as the ‘executor dative’ to deal with the deceased person’s estate. Every part of the deceased person’s estate should be written in the inventory attached to this document. There can be an extra page called an ‘eik’, which contains details of any amendments to the inventory identified at a later date.

Phoenix Life describes itself as a ‘consolidator’ of closed life funds. This means that we bring together closed life funds from different companies for the benefit of all customers.

This is now the key official measure of inflation. It is calculated each month by taking a sample of goods and services that a typical household might buy including food, heating, household goods and travel costs, but excluding mortgage costs. The size of the rise (or fall) in the index determines the rate of inflation (or deflation). The previous key measure was the Retail Prices Index (RPI).

A term used to describe pension policyholders who were contracted out of the State Second Pension (S2P). From 6 April 2012, this option was no longer available to members of a money purchase pension scheme, such as a personal pension. Contracting out from a defined benefits pension scheme was also ended in April 2016.

A type of with-profits policy which has a sum assured or guaranteed cash sum (in other words, an amount we promise to pay you, so long as you pay all the premiums due for the term of your policy).

A type of with-profits policy which has a sum assured or guaranteed cash sum (in other words, an amount we promise to pay you, so long as you pay all the premiums due for the term of your policy).

A type of insurance policy that will pay you a fixed amount, usually as a lump sum, if you are diagnosed with one of the severe illnesses, medical conditions or injuries specified in the policy.

The format of official documents like birth, marriage, death and civil partnership certificates are protected by ‘Crown copyright’. As such, the UK Government (the ‘Crown’) places restrictions on how you can reproduce these documents and how they can be used. For example, the rules say that you cannot use reproductions of these certificates to provide evidence of birth, death, marriage or civil partnership. This is why we ask for original certificates when you are claiming on your policy, looking to change your name etc. More information is available on the Government’s National Archives website.

We refer to these documents as ‘guides to how we manage the with-profits funds’. They give you information about how with-profits funds are managed and have been available to with-profits policyholders since 2006.

This is a scheme that was run by the Association of British Insurers from 2006 to 2010 as part of our industry’s commitment to monitor and improve customer satisfaction.

A regular bonus that may be added each day which usually represents 1/365th of an annual bonus rate.

An Act of Parliament that sets out the rules an organisation has to follow when they store or use information about people. This act also gives a person certain rights to see information about them and to have incorrect information corrected.

The amount paid out on death if an insured person dies.

Some life insurance policies are for a fixed length of time (term) and pay you a fixed lump sum if you die during that time. With a decreasing term policy, the amount paid out if you die reduces over the term. At the end of the term, the policy typically has no value.

A document that transfers benefits or rights from one party to another. Once signed, it becomes legally binding.

A legal document that can be used in the UK to change your name.

The delayed payment of a pension. This is delayed until the policyholder is ready to start taking it.

For income protection policies, the period after the policyholder first becomes ill or unable to work and has not recovered before any income is paid.

A type of company pension provided by some employers. The amount you receive at retirement generally depends on how long you have been a scheme member and how much you are earning shortly before you retire. These are also called final salary schemes.

A type of pension scheme where the pension amount at retirement depends on the amount of money paid into it, and the investment growth. Also known as a money purchase pension scheme.

The process by which a mutual company (one that is owned by its members) becomes a publicly-traded company (one that is quoted on the stock exchange and is owned by shareholders).

 

An individual who is financially dependent on another person.

An annuity may allow for the income you are receiving to continue to be paid to your spouse or dependants after your death, though usually at a lower level.

Payments you make direct from your bank account under the authority of a direct debit instruction.

An investment company is required to tell you the total cost of taking out a product or policy with them.

The practice of spreading investments across different asset classes (see asset class) to create a balance of risk and return in an investment portfolio.

An option under some money purchase pension schemes that allows you to take an income directly from the pension fund while leaving the fund invested. There are two types of drawdown pension - capped drawdown and flexi access drawdown. Flexi access drawdown has been the only option available since April 2015. If you already use capped drawdown you can continue under its existing rules.

Payment of some other kind of benefit instead of money.

A savings product that usually includes life cover. It pays you at least a fixed amount if you die before the policy matures or, at maturity, the sum assured (in other words, the amount we promise to pay you, so long as you pay all the premiums due for the term of your policy) plus any bonuses that may have been added over the term.

A savings product that usually includes life cover. It pays you at least a fixed amount if you die before the policy matures or, at maturity, the sum assured (in other words, the amount we promise to pay you, so long as you pay all the premiums due for the term of your policy) plus any bonuses that may have been added over the term.

An increased amount of premium used to buy units in a unit-linked policy, usually because the policyholder’s adviser has given up some of their commission.

Some companies offer better annuity rates and higher than normal levels of income to people who have made certain lifestyle choices (e.g. smoking), followed certain occupations, or who have had certain medical conditions. Also known as an impaired life annuity.

An option to help protect pension rights built up before 6 April 2006 from the lifetime allowance charge. The option was open until 5 April 2009, but only to people who stopped building up additional pension rights after 5 April 2006. Protection must be registered with HM Revenue & Customs.

A general name for company stocks and shares.

The variable proportion of an investment fund that is invested in equities and property.

The variable proportion of an investment fund that is invested in equities and property.

A way to release some of the value of your property to spend while you are alive. It is generally only suitable for people who own their property but have little in the way of other assets or income.

Regular increases to pension income by a fixed percentage or an increase linked to an index or a measure of inflation.

When a person dies, their ‘estate’ is everything they own (except, in most circumstances, anything owned jointly with another person), less any liabilities, including their main residence, the value of any assets and most money given away by them within the seven years before the date they died. The estate also includes all bank accounts, insurance policies, unit trusts, individual savings accounts (ISAs), personal equity plans (PEPs) and annuities, but not personal pensions, unless we advise you otherwise. More information is available from HM Revenue and Customs.

Some of our with-profits funds have an ‘estate’. The estate is a pot of money or ‘surplus held in a particular with-profits fund which is over and above the amount needed to pay the total value of the policy benefits due to policyholders when the policies mature or are surrendered or transferred. For some funds, we have started to distribute the estate to eligible with-profits policyholders.

Some of our with-profits funds have an ‘estate’. The estate is a pot of money or ‘surplus held in a particular with-profits fund which is over and above the amount needed to pay the total value of the policy benefits due to policyholders when the policies mature or are surrendered or transferred. For some funds, we have started to distribute the estate to eligible with-profits policyholders.

A projection of what you might get back from an investment. It is worked out based on assumed growth rates and future charges you may have to pay. This is an example amount and is not guaranteed. The amount you actually get back may be higher or lower than the EMV, depending on the investment returns and the period invested.

Certain conditions and/or events that a policy does not cover.

Someone named in a person’s will to look after their affairs after they die. Executors’ duties can include claiming the proceeds from a deceased person’s estate and using the assets to carry out their wishes as set out in the will.

The term used to refer to an administrator in Scotland i.e. a person appointed through confirmation to look after a deceased person’s estate, if they haven’t left a will.

The term used in Scotland to refer to an executor i.e. someone named in a person’s will to look after their affairs after they die. The executor nominate’s duties can include claiming the proceeds from a deceased person’s estate and using the assets to carry out their wishes as set out in the will.

A bonus that may be added to a with-profits policy when it is surrendered or matures. The amount of bonus paid (if any) depends on the performance of the investments (and other profits and losses of the fund) over the term of the policy and is not guaranteed. This is sometimes known as an annual, maturity or terminal bonus.

A type of company pension provided by some employers. The amount you receive at retirement generally depends on how long you have been a scheme member and how much you are earning shortly before you retire. These are also called defined benefit pension schemes.

An independent body that regulates the financial services industry within the UK. Visit the FCA’s website at www.fca.org.uk

The Financial Ombudsman Service is an independent public body that helps settle individual financial disputes between customers and businesses. For more information, visit their website at www.financial-ombudsman.org.uk

Financial products that promise the lender one or more fixed cash payments in the future. They may be issued by central or local Government or a company in order to raise capital.

The ability to protect pension funds built up before 6 April 2012 from a lifetime allowance charge. You are given a personal lifetime allowance of £1.8m which will apply until the standard lifetime allowance (£1m for the tax year 2017/2018) exceeds that amount, at which point your personal lifetime allowance will be increased. You must have applied to HM Revenue & Customs for fixed protection by 6 April 2012 and must agree to stop accruing further pension rights, for example by making contributions, from 6 April 2012 onwards.

The ability to protect pension funds built up before 6 April 2014 from a lifetime allowance charge. You are given a personal lifetime allowance of £1.5m which will apply until the standard lifetime allowance (£1m for the tax year 2017/2018) exceeds that amount, at which point your personal lifetime allowance will be increased. You must have applied to HM Revenue & Customs for fixed protection by 6 April 2014 and must agree to stop accruing further pension rights, for example by making contributions, from 6 April 2014 onwards.

The ability to protect pension funds built up before 6 April 2016 from a lifetime allowance charge. You are given a personal lifetime allowance of £1.25m which will apply until the standard lifetime allowance (£1m for the tax year 2017/2018) exceeds that amount, at which point your personal lifetime allowance will be increased. You must apply to HM Revenue & Customs for fixed protection and must agree to stop accruing further pension rights, for example by making contributions, from 6 April 2016 onwards.

An option under some money purchase pension schemes that allows you to take an income directly from the pension fund while leaving the fund invested. There is no limit on the amount you can draw down (take out) each year - in fact the whole fund can be withdrawn as a one-off payment. Any payment you take will be added to your income for the year and taxed in the normal way. Flexi access drawdown has been the only option available since April 2015. If you already use capped drawdown you can continue under its existing rules.

If you are in your employer's pension scheme, you may be able to build up a bigger pension pot by paying extra amounts into a separate, independent scheme which is known as an FSAVC scheme.

The accounting standard that, from 2005, requires companies to put a market value on any pension deficits.

Indexes showing the relative increase or decrease in the price of selected shares on the London Stock Exchange.

A fund pools together the money from many individuals and then the fund manager uses it to invest in a broad range of assets.

A fund manager invests the money investors have paid into a fund in various asset types such as cash, bonds, equities and property and depending upon on the investment objective of the fund.

The pot of money you have saved while you are working for when you retire.

General insurance can include home, contents, motor, travel, unemployment and accident and sickness cover.

Your pension policy may have a Guaranteed Annuity Option (GAO). If it does, and you choose to take an annuity from your pension policy, you are entitled to the guaranteed rate. It is important to check whether you have a GAO and how it operates as this may give you a higher pension than you can get from another company.

Your pension policy may have a Guaranteed Annuity Rate (GAR). If it does, and you choose to take an annuity from your pension policy, you are entitled to the guaranteed rate. It is important to check whether you have a GAR and how it operates as this may give you a higher pension than you can get from another company.

Once a bonus has been added to a with-profits policy it is guaranteed to be paid at the end of the policy, so long as all the premiums due under the policy are paid. It also refers to where bonus rates are guaranteed to be fixed or at least a minimum amount.

The minimum amount to be paid when a policyholder with a with-profits policy retires or dies, so long as all the premiums due under the policy are paid.

The minimum amount to be paid when a policyholder with a with-profits policy retires or dies, so long as all the premiums due under the policy are paid.

A policy where you can invest a lump sum for a fixed term (typically 3 to 5 years) usually with a guaranteed minimum return.

A policy where you can invest a lump sum for a fixed term (typically 3 to 5 years) usually with a guaranteed income of a specified amount for the length of the term.

A fixed term stock market linked investment with a built-in guarantee to return at least the original investment if held to maturity. This offers investors the chance to share in stock market growth potential without risking their original investment.

The minimum amount a policy will pay out if the policyholder dies during the term of the policy, as long as they make all the payments due.

Where a member of an earnings related pension scheme has been contracted out of the State Second Pension (S2P) pension, the pension scheme must guarantee that, at state pension age, the member’s benefits from the scheme will be at least as much as the additional pension they would have received from the state had they remained within S2P. This is known as the Guaranteed Minimum Pension or GMP.

These are exclusive funds with a high minimum investment level and are generally not open to the general public. They are unregulated and exempt from many of the rules surrounding a collective investment. This allows them to follow aggressive investment strategies that are unavailable to Financial Conduct Authority authorised funds. While some hedge funds operate a conservative strategy, others take risky positions on market and share movement.

A government department formed in April 2005 following the merger of Inland Revenue and HM Customs & Excise. Visit the HMRC website at www.hmrc.gov.uk

A projection of what you might get back from an investment. It is worked out based on assumed growth rates and future charges you may have to pay. This is an example amount and is not guaranteed. The amount you actually get back may be higher or lower than the illustration, depending on the investment returns and the period invested.

Some companies offer better annuity rates and higher than normal levels of income to people who have made certain lifestyle choices (for example, smoking), followed certain occupations, or who have had certain medical conditions. (Also known as an enhanced annuity).

This type of policy aims to replace part of your income if you fall ill or become sufficiently disabled that you cannot carry on working. Full details of the benefits are given in the policy terms and conditions.

The tax you pay on your income each tax year. The amount of tax you pay depends on the amount of money you earn and receive from your investments and savings and on your individual tax allowances.

Extra contribution or premium on top of the original premium or contribution.

The only type of financial adviser who can choose from all the products available on the whole of the market.

An investment fund that follows a selected market index, for example the FTSE 100 index. The value of the investment will go up and down in line with the index that it is based on. There are no guarantees.

An increase to annuity payments, pension benefits or premiums you pay, linked to a government index (typically the Consumer Price Index or Retail Prices Index). The purpose of index-linking is to attempt to protect you against rising costs as a result of inflation.

Individual Protection 2014 will give individuals a protected lifetime allowance equal to the value of their pension savings on 5 April 2014, subject to an overall maximum of £1.5 million. You will not lose Individual Protection 2014 by making further savings in to your pension scheme, but any pension savings in excess of your protected lifetime allowance will be subject to a lifetime allowance charge. You can’t apply for Individual Protection 2014 if you already hold primary protection.

Individual Protection 2016 will give individuals a protected lifetime allowance equal to the value of their pension savings on 5 April 2016, subject to an overall maximum of £1.25 million. You will not lose Individual Protection 2016 by making further savings in to your pension scheme, but any pension savings in excess of your protected lifetime allowance will be subject to a lifetime allowance charge. You can’t apply for Individual Protection 2016 if you already hold primary protection or Individual Protection 2014.

An ISA is a product that invests your savings in cash, equities (bonds, gilts and shares), life insurance or a combination of these. You do not pay tax on the income from an ISA, or on any money you may gain when you sell it. There are limits on the amount you can invest in ISAs in each tax year.

If you have a life policy and used to make (weekly) payments to a collector, you have an ‘Industrial Branch’ policy. All other life policies are classed as 'Ordinary Branch’ policies.

 

A rise in the price of goods and services meaning that the same amount of money will buy less in the future than it does today.

If a person dies and the value of their estate is over the threshold or ‘nil rate band’ for inheritance tax (currently £325,000), inheritance tax may be payable on any amount over that figure. If an individual dies after 5 April 2017 an estate may also be entitled to the ‘Residence nil rate band’, which will be £100,000 in 2017/18 (provided that the value of the estate isn't more than £2 million).

Units that can be allocated to a unit-linked or unitised with-profits policy in the first one or two years, which have extra charges to cover the selling and set-up costs for the policy.

A financial intermediary is someone, such as an independent financial adviser, who arranges or organises a financial product or service for you.

A person dies ‘intestate’ if they do not leave a valid will. There are rules, laid down by law, which set out how the person’s estate must be handled.

Returns from investments and profits and losses (growth and falls in prices) on investments.

Returns from investments and profits and losses (growth and falls in prices) on investments.

A life assurance product that provides life cover for more than one person and pays benefits either on the first or second death.

A record of the registered owner of land and of whether there are any mortgages or other restrictions affecting it. The record is held by the Land Registry.

If a policyholder stops paying a regular premium on a life assurance policy, the policy may ‘lapse’. This may be ‘with value’ or ‘without value’ depending on the type of policy and the length of time the policy has been in force.

If the policy lapses ‘with value’ the life cover may continue for a limited period, but will ultimately end if premiums are not paid. The policy will normally have some cash in value. If the policy lapses’ without value’ all life cover ceases and there is no cash in value. Full details of what happens when policyholders stop paying premiums are given in the policy terms and conditions.

Sent by third parties (typically independent financial advisers, or banks and building societies), to confirm they have a policyholder’s permission to get information about their policy.

The legal process of distributing an estate for someone who has died without leaving a will.

The simplest type of life assurance. If you die during the time you are covered, it pays out a specified sum of money. The premiums stay the same throughout the term. There is normally no cash surrender value.

Tax relief on payments paid into life policies taken out before 14 March 1984. This tax relief was removed on 6 April 2015.

The person on whose death the proceeds of a policy will be paid.

If you have a policy that provides life cover, the policy will pay out a sum of money if the life assured on the policy dies.

How long a person is expected to live.

An insurance policy that pays out if you die.

The tax that needs to be paid on any pension benefits that are above the standard lifetime allowance (or your personal lifetime allowance, if higher).The tax charge is 55% if the excess benefits are taken as a lump sum, or 25% if the excess is used to purchase a regular pension income.

When your pension policy matures you can use the money built up in your pension fund to buy an annuity that will give you a regular income in retirement. A ‘lifetime annuity’ gives you a regular income for the rest of your life.

This is a pricing index used when calculating increases to certain pensions (either in payment or deferment). The LPI is the Consumer Price Index (CPI) capped at either 5% or 2.5%.

A savings product that always includes life assurance. It pays out a fixed amount, known as the sum assured, plus any bonuses at the end of a fixed term. It is designed to help pay off the capital of an interest only mortgage but doesn't guarantee to do so. The amount payable if you die during the term is normally sufficient to pay off the mortgage covered.

See market value adjustment (MVA)

For unitised with-profits policies, we may apply a market value adjustment (MVA) if you decide to cash-in your policy (or start taking pension benefits) early, transfer it to another company or switch it from the unitised with-profits fund into another investment fund. Full details of when an MVA may apply are given in your policy terms and conditions.

The MVA is the amount by which the cash-in value is less than the fund value. It is used to help ensure that policyholders who cash in some or all of their with-profits investments before the end of their policy term do not disadvantage the policyholders remaining in the fund.

MVAs are not normally applied when the policy is due to end, if you retire at your chosen retirement date or if you die during the term. For unitised with-profits bonds, there may also be guaranteed dates where we guarantee not to apply a MVA if you cash-in your policy.

The MVA is also sometimes known as a market value reduction (MVR)

For unitised with-profits policies, we may apply a market value reduction (MVR) if you decide to cash-in your policy (or start taking pension benefits) early, transfer it to another company or switch it from the unitised with-profits fund into another investment fund. Full details of when an MVR may apply are given in your policy terms and conditions.

The MVR is the amount by which the cash-in value is less than the fund value. It is used to help ensure that policyholders who cash in some or all of their with-profits investments before the end of their policy term do not disadvantage the policyholders remaining in the fund.

MVRs are not normally applied when the policy is due to end, if you retire at your chosen retirement date or if you die during the term. For unitised with-profits bonds, there may also be guaranteed dates where we guarantee not to apply a MVR if you cash-in your policy.

This is when the policy has reached the set number of years originally agreed. For pension policies, the maturity date is usually called the selected retirement date.

A bonus that may be added to a with-profits policy when it is surrendered or matures. The amount of bonus paid (if any) depends on the performance of the investments (and other profits and losses of the fund) over the term of the policy and is not guaranteed. This is sometimes known as an annual, final or terminal bonus.

A type of pension scheme where the pension (income) amount at retirement depends on the amount of money paid into it, and the investment growth. Also known as a defined contribution pension scheme.

The MPAA is triggered once a member has accessed their benefits flexibly and is the total amount that can be contributed to a money purchase pension scheme. If total contributions exceed the MPAA then a member will have an annual allowance tax charge to pay. The 2017/18 MPAA is set at £4,000.

Due to the unexpected general election planned for 8th June 2017 the current limit remains at £10,000 however the expectation is that this may reduce to £4,000. We therefore strongly recommend that you seek independent financial advice if you intend to contribute more than £4,000.

The legal document you sign giving the lender the legal right to use your property as security for a mortgage.

A type of endowment policy usually linked to an interest only mortgage. The benefits are used to pay off some or all of the mortgage at the end of the term.

These are a form of tax which you pay on your earnings and are deducted at source. The money raised is used to help fund the social security system including the state pension, unemployment and the National Health Service.

If you contracted out of the State Second Pension (S2P) into a money purchase (appropriate) personal pension plan, the part of the national insurance contributions paid by you and your employer to fund S2P was refunded and paid into your pension plan. Since April 2012, individuals in these plans have been contracted back in and their national insurance contributions have gone towards their S2P. Contracting out through a defined benefit scheme ceased in April 2016.

The National Treasury Management Agency (NTMA) provides financial management services to the Government in Ireland. This includes looking after the value of any unclaimed life assurance policies. For more information, visit www.ntma.ie

Income after deductions (such as tax).

From April 2016, if you're a basic rate taxpayer you are able to earn up to £1,000 in savings income tax-free. Higher rate taxpayers will be able to earn up to £500. This is called the Personal Savings Allowance. If you are a basic rate tax payer and have savings income or interest of more than £1,000 (and £500 for higher rate taxpayers) you will have to pay some tax on it.

Your next of kin is your closest relative, usually a spouse or registered civil partner, but if no such person exists, may be a blood relative (i.e. someone who is related to you through a common ancestor, rather than by marriage or adoption, e.g. if you have shared parents or grandparents).

A person, named by a policyholder, as someone they would like to receive benefits from a policy following their death.

Non-forfeiture is where the policyholder/customer is not paying the premiums but some of the benefits are continuing at their full value. There may be an additional cost to maintaining a policy in this way, and it may only be able to continue for a limited time or while there is still a surrender value. Sometimes the unpaid premiums are expressed as a 'loaned' amount.

The benefits built up in a money purchase pension scheme from contributions made by the policyholder or their employer.

These are life assurance policies (typically single premium policies) which do not satisfy specific HM Revenue & Customs requirements and therefore do not qualify for certain tax reliefs. As a result a chargeable event will normally arise when the proceeds are paid.

This is the assumed retirement date we use when we set up a pension policy (for an occupational pension scheme this will be set in the scheme rules).

An individual who is authorised to swear oaths, certify the execution of deeds and who can authenticate signatures, documents and facts with such authentication being relied upon.

A pension scheme set up by an employer for its employees. It usually provides life insurance as well as pension benefits. The pension it pays out can be based on a proportion of the employee's final salary, or on the amount paid in, together with investment growth (see money purchase). Occupational pension schemes can be ‘contributory’, where employees pay into the pension fund as well as their employer, or ‘non-contributory’, where the employer pays all the pension contributions into the fund.

The price at which you buy units in a unit-linked fund.

An ombudsman is an independent person or organisation that can help settle some disputes between an organisation and their customers. The main ombudsman for the financial services industry in the UK is the Financial Ombudsman Service.  If you purchased your policy in the Republic of Ireland, our useful ombudsman selection tool will help you identify the right ombudsman to contact.

A collective investment vehicle in company form. They provide a way for individual investors to pool their money and invest in a broad selection of shares from a range of other companies, with the aim of reducing the risks of investing in individual shares.

Whatever you decide to do with your pension pot you don't have to stay with your current pension provider. You can use the 'open market option' to shop around for the best product to suit you.

The benefits built up in a money purchase pension scheme from contributions made by the policyholder or their employer.

Most life policies are classed as 'Ordinary Branch’ policies. However, if you used to make (weekly) payments to a collector, you have an 'Industrial Branch' policy.

This is where a dependant’s annuity begins on the death of the annuitant (that is, the person who took out the annuity originally) within the annuity guarantee period. As a result two annuities may be paid until the end of the guaranteed period.

For some types of policy (such as endowment policies and pensions), if you stop paying your regular premiums, the policy may have a reduced value that will be paid either when you die or at the end of the policy term, whichever is earlier.

Payment of some other kind of benefit instead of money.

Extra contribution or premium on top of the original premium or contribution.

The amount of tax-free lump sum available to you when you start taking your pension benefits at your selected retirement date.

When the liabilities of an occupational pension scheme are greater than the assets.

‘Pension income’ is another term for an ‘annuity’, which provides you with a guaranteed income in retirement.

For an occupational pension scheme, an estimate of the employer’s future costs of providing retirement benefits already earned by staff.

The actual, or deemed, amount of pension savings made in a pension input period. For a money purchase (pension scheme), it is the total of the contributions paid. For a defined benefit (pension scheme), it is the capital value of the increase in the member’s defined benefits over the pension input period.

The period over which a member’s pensions input is measured. For many pension schemes, the PIP was aligned with the tax year, so it ran from each 6 April to the following 5 April. From April 2016 all arrangements have a pension input period aligned with the tax year.

See ‘income protection

Your personal lifetime allowance will be either the standard lifetime allowance or a higher amount granted to you by HM Revenue & Customs, for example if you have been given fixed or primary protection.

A type of Money purchase (pension scheme) which offers a tax efficient way to save for retirement.

The benefits built up in a money purchase pension scheme from contributions made by the policyholder or their employer.

A ‘plan’ or policy is the contract you hold with us as a ‘planholder’ or ‘policyholder’.

The legal owner of a plan or policy. This may include trustees of a pension scheme.

 

A policy is the contract you hold with us as a ‘policyholder’.

A policy is the contract you hold with us as a ‘policyholder’.

An amount we charge each month, or each time you pay a premium, for managing the fund.

An amount we charge each month, or each time you pay a premium, for managing the fund.

These are contained in the policy document and tell you more about your policy benefits.

See market value reduction (MVR)

The legal owner of a policy. This may include trustees of a pension scheme.

A person who has the authority to make decisions surrounding assets or property on behalf of another party. This person is now often referred to as an ‘enduring power of attorney’ or ‘lasting power of attorney’.

The amount you pay for your policy.

Where a policy allows you to take a temporary break from paying your premiums.

An option to help protect pension rights built up before 6 April 2006, from the lifetime allowance charge. The option was open until 5 April 2009 if you had pension rights worth more than £1.5m at 5 April 2006. People with primary protection can continue to have contributions paid to their retirement plans and build up more benefits. However, if you have benefits greater than your personal Lifetime Allowance, then you may have to pay some tax under the lifetime allowance charge. You must have registered for primary protection with HM Revenue & Customs .

This is a detailed document that describes how we manage the with-profits fund

A policy that will pay for some or all of the cost of private medical treatment, as long as the medical condition is covered by the policy.

The legal process of proving a will, appointing an executor and distributing a person’s estate in accordance with that will.

The office in England and Wales responsible for issuing letters of administration to appoint an administrator for a person’s estate, if they die without leaving a will.

This refers to the insurance company who issued and is responsible for the administration of your policy.

A projection of what you might get back from an investment. It is worked out based on assumed growth rates and future charges you may have to pay. This is an example amount and is not guaranteed. The amount you actually get back may be higher or lower than the projected maturity value, depending on the investment returns and the period invested.

A projection of what you might get back from an investment. It is worked out based on assumed growth rates and future charges you may have to pay. This is an example amount and is not guaranteed. The amount you actually get back may be higher or lower than the projection, depending on the investment returns and the period invested.

An application form signed by you.

This is the person who took out the policy and was the original owner of the policy. This does not need to be the life assured.

Pension funds that were built up in a money purchase pension scheme from National Insurance `rebates` paid by the Government as a result of contracting out of the State Second Pension (S2P). As they replaced some state pension benefits, they were subject to special rules. From 6 April 2012, it was no longer possible to contract out into a money purchase pension scheme. Any protected rights which existed on 6 April 2012 became non-protected rights, so are no longer subject to special rules.

The part of your annuity bought with the value built up from payments the Government has put into your pension plan, if you chose to contract out (see contracting out) of the State Second Pension (S2P).

The value built up from payments the Government made into your pension plan if you were contracting out of the State Second Pension (S2P) into a money purchase pension scheme. Protected rights ceased to exist on 6 April 2012 and any protected rights funds which existed on that date became non-protected rights.

This is part of the Bank of England. It is responsible for the prudential regulation and supervision of financial institutions.

Questions and answers

These are life assurance policies which satisfy specific HM Revenue & Customs requirements in order to qualify for certain tax reliefs. If taken out before 14 March 1984, they benefited from life assurance premium relief (LAPR). The proceeds of such policies are normally paid free from any further tax liabilities. LAPR was stopped from 6th April 2015. See also non-qualifying policy.

An overseas pension scheme that meets certain requirements and is registered with HM Revenue & Customs to receive benefits transferred from a UK pension scheme without incurring an unauthorised payment and scheme sanction charge.

A document showing you the cost of insurance cover, a policy value or a projected value for a future point in time.

A financial penalty typically charged by a lender if you choose to repay a loan early.

The difference between the return that a fund earns on its investments and the return that you receive. The difference represents the effect of expenses and other charges.

Someone who has entered into a formal arrangement (known as ‘civil partnership’) with a same-sex partner.

A pension scheme that has been registered with HM Revenue & Customs so it is bound by, and benefits from, the tax rules and advantages available through registration.

A bonus that may be added to conventional with-profits policies once a year. However, the allocation of bonuses depends on the performance of the fund and we can’t guarantee that a bonus will be added every year but once a bonus is added, it cannot be taken away. For more information on annual bonuses, visit our customer centre, select your former policy provider and look in the ‘with-profits’ section.

Payment for work or services.

Life insurance which pays out if you die during the time you are covered for. At the end of the term, you have an option to renew the cover.

With a repayment mortgage, you repay part of the money you have borrowed each month together with interest. At the end of the mortgage term, you will have repaid the money you borrowed in full and all the interest accrued throughout the term.

RPI is a measure of inflation. It tracks changes in the prices of a basket of goods and services, taking a large sample of retail goods including food, tobacco, household goods, transport fares, motoring costs and clothing. An increase in the index means prices have on average increased. The Consumer Price Index (CPI) is now more commonly used.

Pension policies that were taken out before June 1988 by self-employed people or employed people who were not in an occupational pension scheme.

A bonus that may be added to conventional with-profits policies once a year. However, the allocation of bonuses depends on the performance of the fund and we can’t guarantee that a bonus will be added every year but once a bonus is added, it cannot be taken away. For more information on annual bonuses, visit our customer centre, select your former policy provider and look in the ‘with-profits’ section.

An annuity may allow for the income you are receiving to continue to be paid to your spouse or dependants after your death, though usually at a lower level.

This was an earnings related pension which was paid to you by the Government when you retired, on top of your basic state pension. If you were not contracting out of the S2P, some of your National Insurance contributions went towards S2P. The S2P replaced the State Earnings Related Pension Scheme (SERPS) in 2002. If you reach state pension age on or after 6 April 2016 you will receive the new state pension.

Specific details of what is and isn’t covered by a policy.

A pension scheme administrator fulfils various functions for a pension scheme including communicating with scheme members and reporting to HM Revenue and Customs.

 

An insurance company that provides a pension policy held by the trustees of the scheme.

A person whose pension is part of a registered pension scheme.

A pension paid by the pension scheme or by an insurance company selected by the scheme administrator.

The Scottish Rate of Income Tax was introduced in the Scotland Act 2012. It gives the Scottish Parliament the power to set its own rate of income tax from April 2016.

In connection with a deceased person’s estate if they have died without leaving a will, a ‘sealed copy’ is an extra copy of a grant of probate, letters of administration or confirmation that you can obtain from the Probate Registry of the High Court or the Sheriff's Court (in Scotland). Sealed copies are endorsed with an original stamped seal by the court official. 

The date you select when pension benefits from a pension scheme are intended to come into payment.

Where the person who took out the policy (the policyholder) is also the life assured.

A lump sum paid from a pension scheme to a member who has a life expectancy of no more than 12 months. It is not available to those who have already taken their benefits. If paid after age 75 the lump sum is taxed as pension income at the recipient's marginal rate of income tax.

A shareholder holds one or more shares in a company and has part ownership of that company, and shares in that company’s profits or losses.

A share of the ownership of a company. This also entitles you to share in any profits the company makes.

The office in Scotland responsible for issuing confirmation, the type of grant of representation issued in Scotland if a person has died without leaving a will. To find out more including the address for a local office of the Sheriff’s Court, visit the Scotcourts.gov.uk.

 

A pension income that is payable for a set period of time up to a maximum of 5 years.

A lump sum contribution.

From 6 April 2016 the single-tier state pension was introduced. Individuals need at least 10 years qualifying years to be entitled to receive any state pension and so the amount an individual will receive will be based on how many qualifying years they have, with individuals needing to have accrued 35 qualifying years to be entitled to the full single-tier state pension. The single-tier state pension is £159.55 for the 2017/18 tax year, with this amount increasing each year by the 'triple lock', which is the higher of:

  • earnings - the average percentage growth in wages
  • prices - the percentage growth in prices in the UK measured by the Consumer Prices Index (CPI)
  • 2.5%

A payment that allows you to take your pension fund as a lump sum without triggering the Money Purchase Annual Allowance. Usually 25% is paid tax free, with the remaining 75% being taxed at marginal rate. In order for you to take your pension savings as a small pots payment, there are a few conditions you must meet:

  • You must be aged 55 or over
  • The payment must not exceed £10,000 at the time it is paid to you.
  • You must take all the benefits from the pension
  • You cannot have taken the benefits of 3 or more other non occupational money purchase pensions under this rule. However, this does not apply to occupational money purchase schemes as the number of small pot payments is unlimited.

With-profits investments include a special feature known as smoothing. Smoothing is designed to protect investors from the direct impact of any sudden movements in the stock market. However, it can’t get rid of the strong link between underlying market returns and with-profits returns. 

A husband, wife or civil partner.

An annuity may allow for the income you are receiving to continue to be paid to your spouse or dependants after your death, though usually at a lower level.

A personal pension with restricted costs introduced by the Government in April 2001.

The Government limit on the total value of all pension benefits a person can take without having to pay tax (ignoring any special factors such as having enhanced protection or fixed protection). It has been set at £1m for the tax year 2017/2018.

The tax that needs to be paid on any pension benefits that are above the standard lifetime allowance (or your personal lifetime allowance, if higher). The tax charge is 55% if the excess benefits are taken as a lump sum, or 25% if the excess is used to purchase a regular pension income.

An instruction you give to your bank or building society to pay regular amounts to a third party.

The UK state pension is made up of two parts - the basic state pension and the Second State Pension or ‘S2P’. You will receive a basic state pension so long as you have paid or been credited with enough national insurance contributions by the time you reach the state pension age. The S2P is an earnings related pension scheme, and part of your national insurance contributions will go into the S2P unless you are contracted-out of the S2P to your employer’s scheme. The S2P replaced its predecessor the State Earnings Related Pension Scheme (SERPS) in 2002.

The age at which you are entitled to draw your state pension

An illustration of what the pension policy (or pension scheme) might provide at the normal retirement date. It uses assumptions which are generally set by the regulator. This illustration is normally sent to most pension policyholders each year, except in the year before the normal retirement date.

If your policy has a sum assured, this is the amount we promise to pay you, so long as you pay all the premiums due for the term of your policy. For whole life policies, we will pay this amount when the life assured dies. For endowment policies, we will pay this amount when the life assured dies or at the end of the policy term.

If you cancel an investment or life assurance policy, this is known as a surrender. There may be penalties if you cancel the policy before the policy ends or ‘matures’. You should think carefully before surrendering your policy. We recommend that you seek independent financial advice before you do.

The amount you might get if you surrender or cancel an investment or life insurance policy. You should think carefully before cashing in your policy. We recommend you seek independent financial advice before you do.

Until April 2004, a fund manager could claim a 10% tax credit on UK share dividends from HM Revenue & Customs. This is no longer available.

The amount of cash you can withdraw from your pension fund as a single lump sum when you retire, without paying tax. This is normally restricted to 25% of the value of your fund or its equivalent.

An annuity that is paid for a fixed period only.

The length of time a policy is in force or, in the case of a mortgage, the length of time you have to repay what you have borrowed.

Life assurance giving protection for a specific amount of time (the term).

A bonus that may be added to a with-profits policy when it is surrendered or matures. The amount of bonus paid (if any) depends on the performance of the investments (and other profits and losses of the fund) over the term of the policy and is not guaranteed. This is sometimes known as an annual final or maturity bonus.

For life insurance, an advanced or rapidly progressing incurable illness where, in the opinion of an attending consultant or a Chief Medical Officer, life expectancy is likely to be no greater than 12 months.

A UK regulator for work-based pensions, set up under The Pensions Act 2004. Visit their website at www.thepensionsregulator.gov.uk

Generally, the present Government and the departments responsible for the administration of the UK.

A person or organisation who is not directly involved in a contract or relationship but has an interest in it.

Extra contribution or premium on top of the original premium or contribution.

A type of with-profits policy which has a sum assured or guaranteed cash sum (in other words, an amount we promise to pay you, so long as you pay all the premiums due for the term of your policy). A with-profits policy shares in the profits and losses of the fund it invests in, in the form of bonuses. The bonuses may be added each year and / or at the end of the policy.

A type of with-profits policy which has a sum assured or guaranteed cash sum (in other words, an amount we promise to pay you, so long as you pay all the premiums due for the term of your policy). A with-profits policy shares in the profits and losses of the fund it invests in, in the form of bonuses. The bonuses may be added each year and / or at the end of the policy.

The transfer of pension in between products or from one pension provider to another.

The amount received from another pension scheme or pension provider when pension benefits are moved from one provider to another.

The amount of money that can be transferred to another pension plan or pension scheme.

The option to take a small pension fund as a one-off lump sum, subject to an income tax charge, instead of buying an annuity. It is normally available if you are aged 55 or over and have a total combined value in defined benefit pension schemes that is below a certain threshold. For the 2017/18 tax year, this threshold is £30,000. A trivial commutation lump sum death benefit can also be paid.

Where a policy is held by a person or persons (the trustee(s)), for the benefit of another person or persons (the beneficiaries), the trustees are the legal owners and will be the people entitled to make a claim under the policy. The trustees have the duty to make sure that the proceeds are paid to the named beneficiaries, or are managed on their behalf.

The legal document that transfers the legal ownership of a policy to the trustees to hold, subject to the terms of a trust.

Unauthorised payments are any payments that don't meet the conditions to be an authorised payment. Examples could be: trivial lump sums in excess of £30,000 or continued payments of pension after the member's death.

The assets money is invested in to build up the value in a policy.

The person who assesses the terms we accept business on and whether a policyholder should be charged because they are at a higher risk of dying or becoming ill.

Calculating the risk that a policyholder will make a claim on an insurance policy, based on information such as age, sex, health and occupation. Underwriters can then decide how much the insurance premiums should be.

A unit-linked policy is linked directly with particular investments (for example, stocks and shares). The amount you finally receive depends on the success of these investments, which can go up or down in value.

A with-profits policy that distributes any profits on a daily basis, typically at 1/365th of the annual rate. A market value adjustment may apply to these policies in certain circumstances.

A with-profits policy that distributes any profits on a daily basis, typically at 1/365th of the annual rate. A market value adjustment may apply to these policies in certain circumstances.

A unit-linked policy is linked directly with particular investments (for example, stocks and shares). The amount you finally receive depends on the success of these investments, which can go up or down in value.

Until 5 April 2011, this was pension income drawn directly from a money purchase pension fund, or through a short term annuity, by someone aged under 75. On 6 April 2011, this was replaced by capped income drawdown or flexible income drawdown.

An interest rate that can move up or down at any time, usually when there are movements in the Bank of England Base Rate.

The benefits built up in a money purchase pension scheme from contributions made by the policyholder or their employer.

For income protection policies, this is the period after first taking out the policy when you are not fully covered.

The policy may allow for regular premiums to be suspended if you become ill or unable to work.

A life assurance policy which pays out whenever you die. Premiums might be paid for a specified period, up to a specified age or until you die.

A life assurance policy which pays out whenever you die. Premiums might be paid for a specified period, up to a specified age or until you die.

A legal document that allows an individual to specify how their assets are to be handled following their death, naming the person, or persons, responsible for carrying out those wishes.

A one-off lump sum paid, that may be subject to an income tax charge, under an occupational pension scheme which is winding up when the available fund is below a prescribed threshold. This threshold is £18,000 for the 2017/2018 tax year. There are no age limitations on when it can be paid.

A with-profits endowment is a savings product which usually includes life cover. It pays you at least a fixed amount if you die before the policy matures, or the sum assured plus any bonuses that may have been added over the term, at maturity.

A with-profits policy shares in the profits and losses of the fund it invests in, in the form of bonuses. The bonuses may be added each year and / or at the end or the policy.

A with-profits endowment is a savings product which usually includes life cover. It pays you at least a fixed amount if you die before the policy matures, or the sum assured plus any bonuses that may have been added over the term, at maturity.

A with-profits policy shares in the profits and losses of the fund it invests in, in the form of bonuses. The bonuses may be added each year and / or at the end or the policy.

A bonus that may be added to conventional with-profits policies once a year. However, the allocation of bonuses depends on the performance of the fund and we can’t guarantee that a bonus will be added every year but once a bonus is added, it cannot be taken away. For more information on annual bonuses, visit our customer centre, select your former policy provider and look in the ‘with-profits’ section.

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