1 INSURANCE KEY FEATURES OF THE: Relevant Life Plan This is an important document which you should keep in a safe place. This is a guide to our Relevant Life Plan and is based on our understanding of current laws and tax rules.
2 2 LEGAL & GENERAL PROTECTION PLANS KEY FEATURES USING THIS DOCUMENT. WHAT ARE KEY FEATURES? The Financial Conduct Authority, the independent financial services regulator requires us, Legal & General, to give you this important information to help you decide whether our Relevant Life Plan is right for you. You should read this document carefully so that you understand what you are buying, and then keep it safe for future reference. OTHER DOCUMENTS You should read this document alongside the Personal Illustration. You can also ask for a copy of the Policy Terms and Conditions. If you are visually impaired, and would like this document in Braille, large print or audiotape, copies are available from our Helpdesk. ABOUT LEGAL & GENERAL The Legal & General Group, established in 1836, is one of the UK s leading financial services companies. As at 30 June 2014, we were responsible for investing 467 billion worldwide on behalf of investors, policy owners and shareholders. We also had over 7.9 million customers in the UK for our life assurance, pensions, investments and general insurance plans.
3 LEGAL & GENERAL PROTECTION PLANS KEY FEATURES 3 WHAT IS A RELEVANT LIFE PLAN? A Relevant Life Plan offers a tax efficient way for an employer to arrange Life Cover, with the benefit paid out to the employee s family or financial dependants. It must meet legislative requirements so that the plan can qualify for certain tax benefits. Relevant Life Plans are usually viewed as an allowable business expense by HMRC. This means that all premiums and paid benefits qualify for full Income Tax relief, National Insurance relief and Corporation Tax relief. Premiums could be reduced by up to 49% compared to a typical life policy if you are a higher rate taxpayer. For a basic rate taxpayer this figure could be up to 40%. Our Relevant Life Plan assumes that the policy will be placed in a Discretionary Trust at the start, with the employee s family or dependants as beneficiaries. The benefit will pay out to the trustees of the Relevant Life Plan Trust. AIMS Our Relevant Life Plan is designed for businesses to provide individual life cover benefit for its employees, to help protect against the impact of death and Terminal Illness on the employee and their family whilst they are employed. The policy could be used to help protect the lifestyle of the employee s family and their everyday living expenses. The policy is a single life policy which is designed to cover the employee whilst they are employed by their current employer: If they die before the end of the policy. If they are diagnosed as being terminally ill and in the opinion of their hospital consultant and our medical officer, the illness is expected to lead to death within 12 months. The policy will only pay out a lump sum in full once. After this happens, the policy will end and they ll no longer have any cover. COMMITMENT The employer and employee must give us accurate information when we re setting up the policy as the policy may not pay out if we don t receive full and honest answers to the questions asked at application. Please don t assume we ll contact their doctor to find out their full medical details. The employer and employee need to let us know if any information given to us in the application changes before the policy starts. The employer pays us premiums for the life of the policy. They can pay them either monthly or annually. If they stop paying them, the employee s cover will come to an end 30 days after the last premium was due. RISKS The employee is not covered if they intentionally take their own life within the first year of the policy. We won t pay out if the Terminal Illness doesn t meet our definition; and for any exclusions we apply to the policy which we will tell the employee about in the Policy Schedule. We will not pay out if the employee reaches the end of their policy without making a valid claim. Terminal Illness Cover can t be claimed after death or within the 12 months immediately before the end of the policy, or if the length of your policy is less than two years. The plan is based on our understanding of current laws and tax rules, however, tax legislation may change and this may impact the tax efficient benefits. If the policy is not written within a Discretionary Trust then this may impact the tax efficient benefits. There is no guarantee that the favourable tax position will apply in all cases, for example, if the plan was taken out for tax avoidance purposes. For more information, please speak to your financial adviser or read the Policy Terms and Conditions.
4 4 LEGAL & GENERAL PROTECTION PLANS KEY FEATURES QUESTIONS AND ANSWERS. WHO IS ELIGIBLE TO HAVE A RELEVANT LIFE PLAN? To be eligible for a Relevant Life Plan, the employee must be: A UK resident An employee of a business that resides in the UK, for example, directors on PAYE and salaried partners. Sole traders, equity partners or a partnership or equity members of a Limited Liability Partnership (LLP) are not eligible. Relevant Life Plans are particularly aimed at: Employers who wish to provide Life Cover for specific employees (for example high earners and directors) above those available in an employer s group scheme. Employers who are unable to take out group cover for their employees (for example the employer may have too few employees to be eligible for a group scheme). WHAT MAXIMUM AMOUNT OF COVER IS AVAILABLE? The table below shows the maximum amount of cover available, based on the employee s remuneration. Remuneration includes salary, bonuses, benefits in kind and regular dividends from shares in the employer s company or a company within the employer s group of companies. AGE LIMITS years up to 25 X remuneration years up to 25 X remuneration years up to 25 X remuneration years up to 20 X remuneration years up to 15 X remuneration If the employee already has life cover, this will be taken into account to determine their maximum cover. We will ask for evidence of earnings for any amount of cover requested over 3,500,000. Maximum age for buying a plan The plan must end before age Minimum length of the plan Maximum length of the plan Guaranteed* or Reviewable Premiums year 40 year Guaranteed* * Guaranteed premiums stay the same for the length of the policy, unless the employer makes changes to the policy.
5 LEGAL & GENERAL PROTECTION PLANS KEY FEATURES 5 WHAT BENEFITS ARE AVAILABLE? The following benefits may be available. Some of these benefits are subject to age and other restrictions. ACCIDENTAL DEATH BENEFIT Automatically included at no extra cost. WHAT IS COVERED? We ll cover the employee from when we receive the application, for up to 90 days or until we accept, postpone or decline the application. This means that if the employee dies due to an accident during this time, we ll pay out the amount of cover, up to a maximum of 300,000 for all applications. The benefit will be paid out if the employee sustains bodily injury caused by accidental, violent, external and visible means which is the sole cause of death and if the death occurs within 90 days of such an accident. We don t provide this benefit: If we have been told that the application is to replace an existing policy with us while cover is still provided under the existing policy. From the date the employer tells us that they no longer want the application to proceed. If a claim is made under Accidental Death Benefit, we ll only pay out once. This will be either under the Accidental Death Benefit or the Relevant Life Plan itself. WHAT IS NOT COVERED? The benefit will not be paid out if death occurs from: Self-inflicted injury, including intentionally taking own life. Taking part or attempting to take part in a dangerous sport or pastime. Taking part or attempting to take part in any aerial flight other than as a fare paying passenger on a licensed airline. Committing, attempting or provoking an assault or criminal offence. War (whether declared or not), riot or civil commotion. Taking alcohol or drugs (unless these drugs were prescribed by a registered doctor in the United Kingdom). Accidents that have occurred prior to application.
6 6 LEGAL & GENERAL PROTECTION PLANS KEY FEATURES INDEXATION Optional must be chosen at the start of the policy. WHAT IS COVERED? Indexation is designed to protect the policy against inflation. Every year, we ll give the employer the option to increase the amount the employee is insured for (up to a maximum of 10%), in line with any changes in the Retail Prices Index (RPI)* without the need for further medical evidence. The premium will increase at a different rate to the amount of cover because it s indexed by the change in the RPI multiplied by 1.5 up to a maximum of 15%. This takes into account the fact that the likelihood of claiming increases as you get older. If changes to the RPI are 1% or less then both the premium and amount of cover will stay the same until the next review. * The Retail Prices Index is a way of measuring the impact of inflation on family budgets and is published by the Government. WHAT IS NOT COVERED? If the employer decides at review not to increase the amount the employee is insured for, we won t offer this option again. The employer won t be able to add Indexation to the policy if we increased the premium when the policy was applied for. For further details on indexation please see your financial adviser or read the Policy Terms and Conditions.
7 LEGAL & GENERAL PROTECTION PLANS KEY FEATURES 7 TRUST INFORMATION Our Relevant Life Plan assumes that the policy will be placed in a Discretionary Trust (Legal & General s Relevant Life Plan Trust) at the start, with the employee s family or dependants as beneficiaries. WHAT IS A RELEVANT LIFE PLAN TRUST? Our Relevant Life Plan Trust is a Discretionary Trust. A Discretionary Trust is a legal arrangement which allows the Relevant Life Plan to be given to a trusted group of people (trustees), to look after, before they pass it on to the beneficiaries. The trustees are the legal owners of the policy. The employer is automatically appointed as a trustee but the employee is not. Up to three further trustees can be appointed, one of which can be the employee. The employee can elect the beneficiaries when setting up the trust using a Nomination Form however, it is the trustees who also decide how much the beneficiaries receive and when. Please ask your financial adviser or see our Guide to being a Trustee for further information on what to expect when becoming a trustee. HOW TO SET UP THE RELEVANT LIFE PLAN TRUST The following key documents need to be completed: The Trust Deed This is the legal document that creates the trust. It must be signed by the employer and the trustees. It names the people involved, what roles they have and gives details of the Relevant Life Plan which is being put into trust. The Nomination Form We recommend that the employee completes a Nomination Form, which says who they would like to benefit from the Relevant Life Plan. The Nomination Form acts as a guide to the trustees, however, it is not legally binding. WHO RECEIVES THE LUMP SUM PAYMENT? The benefit will pay out to the trustees of the Relevant Life Plan Trust and the trustees decide which of the beneficiaries receive the payout, how much and when. ARE PAYOUTS TAXED? Any payout that we make should be free of UK Income Tax and Capital Gains Tax. The Government may change this tax position at any time. Benefits paid through the Relevant Life Plan Trust do not form part of the estate of the employee for Inheritance Tax purposes. Lump sum benefits are subject to the normal Inheritance Tax rules for Discretionary Trusts. This means exit and periodic charges may apply at maximum of 6% in each case. However, there are some occasions where there is potential for an Inheritance Tax charge to arise within the trust itself. Please speak to your financial adviser for further details.
8 8 LEGAL & GENERAL PROTECTION PLANS KEY FEATURES WHAT HAPPENS IF THE EMPLOYEE LEAVES THEIR CURRENT EMPLOYER? (CONTINUATION COVER) The employee has two options if they wish to keep their policy after leaving their current employer, with both options there will be no need for further medical evidence or underwriting. If the employee decides not to use the continuation cover the policy will end 90 days after leaving the employer. Option 1: NEW EMPLOYER New employer takes over the payment of the premiums from the old employer For this option the policy should remain as a tax efficient Relevant Life Plan and the features and benefits will remain the same (for example, Terminal Illness Cover will continue). To do this: We must be told within 90 days of leaving the old employer, that the policy is to continue with the new employer as a Relevant Life Plan. We will need details of their new employer and the new employer will need to take over the payment of premiums from the start of their employment. There must be no break in premiums between the old and new employer. The trust will continue, however, the old employer should retire as a trustee and the new employer should be appointed in their place to ensure that the old employer is no longer involved and to make things practically simpler in the future. Option 2: EMPLOYEE The employee takes over the payment of premiums from the old employer For this option the policy will no longer benefit from the tax advantages of being a Relevant Life Plan and Terminal Illness Cover will no longer apply. However, the trust can continue and may provide the same Inheritance Tax benefit as putting a standard policy in a family trust; please see your financial adviser for more information. To do this the employee must: Let us know within 90 days of leaving the old employer that they are leaving but that they want the policy to continue in a personal capacity, without Terminal Illness Cover. Arrange to take over payment of the premiums, by providing us with a new direct debit mandate. The trust will continue, however before the Life Assured pays any premiums, they should ensure that they are removed as a beneficiary of the trust. In addition, the old employer should retire as a trustee and a new trustee should be appointed in their place to ensure that the old employer is no longer involved and to make things practically simpler in the future.
9 LEGAL & GENERAL PROTECTION PLANS KEY FEATURES 9 FURTHER INFORMATION. HOW DO WE SET THE PREMIUMS? The premium depends on several factors. If the employee takes part in dangerous activities, or has a pre-existing medical problem, we might need to charge an extra premium or exclude a specific condition from their cover. CAN THE EMPLOYER INCREASE THE COVER? Yes, the employer can increase the employee s cover. Usually, changes to the amount of cover will be assessed at the time. However, if the Guaranteed Insurability Option is shown in the Policy Schedule then the employer can increase the cover, if there are certain changes in the employees life, without the need to provide us with further medical information. Please see the Policy Terms and Conditions for further information. CAN THE EMPLOYER MAKE CHANGES TO THE POLICY? Yes, the employer can make changes to the policy. Please talk to us and we ll consider the request and let the employer know if what they re asking for is possible and what the new premium will be. If the employer makes any changes to the policy then a new policy may be set up and different terms and conditions could apply. WHAT IF THE EMPLOYER WANTS TO CANCEL? The employer can cancel the policy at any time. When the employer first takes out the policy we ll send a cancellation notice. If the employer cancels within 30 days, we ll refund any premiums paid. If they cancel the policy at a later stage, the employer will not get any money back.
10 10 LEGAL & GENERAL PROTECTION PLANS KEY FEATURES HOW DO YOU MAKE A CLAIM OR CANCEL? Claims/Cancellations Department Legal & General Assurance Society Limited City Park The Droveway Hove East Sussex BN3 7PY * WHO REGULATES LEGAL & GENERAL? We are authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. We are entered on their register under number You can check this at: or telephone them on: HOW DO I COMPLAIN? If you have a complaint about our service or would like a copy of our internal complaint handling procedure, please contact us at: Legal & General Assurance Society Limited Knox Court 10 Fitzalan Place Cardiff CF24 0TL * Making a complaint doesn t affect your legal rights. If you re not happy with the way we handle the complaint, you can talk to the Financial Ombudsman Service at: Exchange Tower Harbour Exchange Square London E14 9SR * * THE FINANCIAL SERVICES COMPENSATION SCHEME (FSCS) We are covered by the Financial Services Compensation Scheme (FSCS). You may be entitled to compensation from the scheme if we cannot meet our obligations. Whether or not you are able to claim and how much you may be entitled to will depend on the specific circumstances at the time. For further information about the scheme please contact the FSCS at: or call then on: This contract is governed by English Law. The terms and conditions and all communication will only be available in English. * Call charges will vary. We may monitor or record calls.
11 For General Enquiries please call our Helpdesk on: * * Call charges will vary. We may monitor or record calls. Legal & General Assurance Society Limited Registered in England and Wales No Registered office: One Coleman Street, London EC2R 5AA We are authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. W /14
00000 Old Mutual Wealth Life Assurance Limited is a provider of long-term life assurance. It is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and Prudential
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