FLEXIBLE GUARANTEE BOND SERIES 2

Transcription

1 FLEXIBLE GUARANTEE BOND SERIES 2 Key features of the Flexible Guaratee Bod Series 2 The Fiacial Coduct Authority is a fiacial services regulator. It requires us, LV=, to give you this importat iformatio to help you to decide whether our Bod is right for you. You should read this documet carefully so that you uderstad what you are buyig, ad the keep it safe for future referece.

2 Key Features of the Flexible Guaratee Bod Series 2 With this Key Features you should have also bee provided with a booklet called Your guide to how we maage our with-profits fud. I this you ll fid useful iformatio to help you uderstad how we maage your ivestmet i our with-profits fud. We strogly recommed you take a few miutes to read it. Its Aims Our bod aims: To give you a better retur tha cash over the loger term by ivestig i stocks & shares, commercial property ad other ivestmets. To help you match your ivestmet to the amout of risk you wat to take. To give you the optio to limit the risk, by addig a guaratee. We explai the guaratee optio i more detail i What is the guaratee? o page 7. Your Ivestmet You ivest a lump sum for at least five years ad ideally loger. Of course, we do t wat to lose you, so you ca stay ivested for as log as you wish. I geeral, the loger you stay ivested, the better the chace of your bod performig well. Naturally, this meas your bod may ot perform as well if you take your moey out i the early years. Key features of the Flexible Guaratee Bod Series 2 2

3 Risks Clearly, if we re goig to try to give you a better retur tha cash, there are some risks ivolved that you would t experiece if you left your moey i a bak or buildig society accout: Our bod ivests i stocks & shares ad other ivestmets which ca rise ad fall i value. This meas you re ot certai to make a profit ad you could get back less tha you ivested. If more moey is take out of your bod tha the amout of growth o your bod, this will eat ito your origial ivestmet. The cost of goods ad services goes up over time, which could reduce the real value of the lump sum you get back whe you cash i your bod, eve if you ve added a guaratee. Your persoal tax positio, or the way our bod is taxed could chage. This may reduce the amout you get back or icrease the amout of tax you pay. If you qualify for age allowace or govermet tax credits you could lose some or all of these beefits if you make a profit whe you cash i your bod or more tha your 5% allowace is take out. We explai your 5% allowace i more detail i What about tax? o page 12. Key features of the Flexible Guaratee Bod Series 2 3

4 Questios & Aswers We ve set out the aswers to some very importat questios about our bod below. These will help you decide whether to ivest i it. To ivest i this bod you must speak to your fiacial adviser. Is this bod right for me? Our bod is desiged for people who wish to ivest for at least five years ad ideally loger. You ca ivest i our bod if you re aged 17 or over ad a UK residet. The miimum age for ay lives assured is 3 moths ad the maximum age is 89 (this maximum applies to the yougest life assured if you have a joit life secod death bod). You may wish to ivest i our bod if you re able to ivest a lump sum for at least five years ad ideally loger. You eed to uderstad ad accept the risks associated with stock market ivestmets, as these risks come had i had with the potetial reward of your ivestmet doig better tha cash would over the loger term. Our bod offers three fud optios, with differet levels of ivestmet risk. So whether you re ivestig i stocks ad shares for the first time ad wat to take a cautious approach, or you re a experieced ivestor lookig for higher risks ad potetial rewards, oe of our fud optios could be right for you. We ve explaied each of our fud optios i Where s my moey ivested? o page 5. You might ot wat to ivest i our bod if you expect to be a higher rate taxpayer or ear the higher rate tax bad whe you cash i your bod. Please refer to What about tax? o page 12 for more details. You should t ivest i our bod if you ca t ivest for at least five years or do t feel you uderstad the risks associated with stocks ad shares. Remember that the level of risk you take depeds o the fud optio you choose. Key features of the Flexible Guaratee Bod Series 2 How much ca I ivest? The miimum ad maximum ivestmet ito a ew bod is: Miimum 5,000 Maximum 500,000 (less ay amout already ivested with LV= i a Flexible Guaratee Bod Series 2, Flexible Guaratee Bod, All-i-1 Ivestmet Bod, Flexi Guaratee Pla, or Guarateed Capital Bod). Your bod will be set up as a sigle premium ivestmet, so if you wat to ivest more moey i the future, we ll set up a completely ew bod for your additioal ivestmet. Your ivestmet must be made by cheque. 4

5 Where s my moey ivested? Your moey is ivested i our with-profits fud. You ca choose oe of three fud optios. Each of these ivests i a mix of assets icludig stocks ad shares, commercial property, fixed iterest ivestmets (both govermet ad corporate bods) ad some cash. It s the the job of the asset maagemet team to achieve the best possible returs for you. You ll also share i the performace of the Friedly Society s other busiesses (we ve explaied this i more detail i Your guide to how we maage our with-profits fud ). To help you uderstad the differece betwee the three fud optios ad to decide which is right for you, we ve explaied them i more detail below. Please remember that, o matter which fud optio you choose, your ivestmet ca go dow as well as up. The higher the amout ivested i stocks ad shares, the more frequetly this will happe ad the more sigificat the chages i value will be. These are stock market ivestmets, which meas that you are t certai to make a profit. STOCKS & SHARES PROPERTY FIXED INTEREST Cautious Series 2 this fud is desiged to provide the potetial for steady growth. The fud is maily ivested i fixed iterest securities with the balace i equities ad property. This is the lowest risk fud optio uder our bod ad therefore offers the lowest growth potetial. Balaced Series 2 this fud is desiged to provide the potetial for moderate growth. Aroud half of this fud is ivested i fixed iterest securities with the balace i equities ad property. We believe this fud is higher risk tha the Cautious Series 2 fud, but lower risk tha the Maaged Growth fud. Maaged Growth this fud is desiged to provide the potetial for higher growth tha the other two fud optios. But of course, this meas that it s also the most risky. Aroud two thirds of the fud is ivested i equity ad property with the balace i fixed iterest securities. We may declare a mutual bous. If we do, we ll ivest ay mutual bous added i the same fud optio that you ve chose for your bod. You ll fid more iformatio about our mutual bous i Your guide to how we maage your ivestmet i our with-profits fud. Key features of the Flexible Guaratee Bod Series 2 5

6 How much of my moey will be ivested? 100% of the moey you pay to us will be ivested ito your bod, after ay iitial adviser charge that you ask us to pay to your fiacial adviser o your behalf. What is averaged pricig? If you ve bee ivested i your fud optio for 26 weeks or more, we protect your ivestmet from short term ups ad dows by averagig the value of the assets over the previous 26 weeks. Sometimes we wo t use this averagig, which ca lead to a sudde drop i the value of your ivestmet (this is explaied i Coditio A4 of the Bod Coditios, alog with a example). Oe effect of averagig meas that if the markets are risig whe you cash i all or part of your ivestmet, you may get back less tha if you were ivested directly i the assets. But if markets are fallig, you may get back more. Ca I chage my fud optio? Yes. You ca chage your fud optio at ay time. We ll ormally do this for free, but if you chage your fud optio regularly, we ll apply a charge for this. We explai this i more detail i What are your charges? o page 9. You ca oly ivest i oe fud optio at a time. So if you do chage your fud optio, you have to move the total amout i your bod. Whe you chage your fud optio, ay guaratee you have will be cacelled. So you might wat to add a ew guaratee whe you do this. If you do this, you should ote that the cost of the guaratee ad the choice of guaratee terms is differet for each fud optio. You ca fid out the curret rage of guaratee choices by callig us o or lookig o our website at We ve explaied the charges for chagig fud optios ad addig a ew guaratee i What are your charges? o page 9. Key features of the Flexible Guaratee Bod Series 2 6

7 What is the guaratee? The guaratee is exactly that a guaratee that your bod will be worth at least a miimum amout at the ed of the guaratee term. The guaratee is available o each fud optio but the choice of guaratee terms ca be differet for each fud optio. Of course, we ca t offer this guaratee for free you have to buy oe. We ve explaied our charges for this i more detail i What are your charges? o page 9. How does the guaratee work? By choosig the guaratee optio, we guaratee that the value of your bod at the ed of the guaratee term, will be at least the same as the value of your bod o the date you added it. So, if the value has icreased, you ll get this higher value, but if the value would have decreased, you are protected. Of course, ay moey you ve take out of your bod i this guaratee term (icludig ay moey that s bee paid out to your fiacial adviser as ogoig ad ad-hoc adviser charges) will be take ito accout ad deducted from the guarateed amout. For example: Adria ivested 24,000 o 1 July At the same time, he decided to add a guaratee ad chose a guaratee term of seve years. This meas that if o moey is take out, either by Adria or to pay ogoig or ad-hoc adviser charges, the value of his bod o 1 July 2022 is guarateed to be at least 24,000. If Adria cashes i his bod at this time, he ll get at least 24,000 back plus ay icrease i his ivestmet. If Adria had t added a guaratee, ad the value of his bod o 1 July 2022 is less tha 24,000, he ll make a loss if he cashes i the. At the ed of the guaratee term, if the value of your bod is less tha the guarateed amout we ll add uits to your bod, to icrease the value to the guarateed amout (less ay withdrawals take - icludig ay ogoig ad ad-hoc adviser charges - sice the guaratee was added). So you do t eed to cash i your bod to beefit from this guaratee, ulike some other bods. Ay mutual bous added to your bod wo t be icluded i the amout guarateed. This meas that if the value of your bod is less tha the guarateed amout we would add uits to icrease the value to the guarateed amout ad ay mutual bous will be o top of this. You ca add a guaratee to your bod whe you first ivest, or at ay time afterwards. You ca also replace a guaratee with a ew oe at ay time. You may wat to do this to lock i ay growth. You ca fid out the curret rage of guaratee choices by callig us o or lookig o our website at You ca replace your guaratee with a ew oe but if you do this more tha oce each year we ll apply a admiistratio charge. This charge is explaied i more detail i What are your charges? o page 9. Key features of the Flexible Guaratee Bod Series 2 7

8 You ca oly have oe guaratee at ay time, so if you add a ew oe, the other oe will be cacelled. You beefit from lockig i the growth to date, but a ew guaratee term will start from the date of the guaratee replacemet. For example: Rachel ivested 40,000 o 1 July 2015, ad added a six year guaratee at the same time. O 30 November 2018 her bod is worth 45,000. She replaces her existig guaratee with a ew oe ad this time chooses a guaratee term of eight years, so the ew guarateed amout is ow 45,000. This amout is guarateed o the 8th aiversary from the date the ew guaratee was added, o 30 November This meas that the growth of 5,000 is effectively locked i. Ay guaratee will oly apply at the ed of the chose guaratee term. So, if you cash i your bod before or after this, you may get back less tha the guarateed amout. This may be less tha you ivested. Before ay guaratee term eds, we ll write to you to cofirm the date it will ed ad let you kow what replacemet guaratees are available at that time should you wish to add a ew oe. To fid out more about how our guaratee works ad how to replace a guaratee, please refer to Coditios A5 ad A6 of the Bod Coditios. Ca I take moey out? Yes, you ca. Our bod is desiged for people who ca leave their moey ivested for at least five years. If you do eed to take moey out you ca do so at ay time ad there is o charge for doig this. You ca fid out more iformatio about takig moey out of your bod i Coditio A11 of the Bod Coditios. Key features of the Flexible Guaratee Bod Series 2 If you re thikig about takig moey out of your bod, please read the What about tax? sectio o page 12, as if you re a higher rate taxpayer, or become oe because you take moey out of your bod, there may be additioal tax to pay. Whe you cash-i your bod, oce we ve worked out its value, we ll add ay mutual bous. 8

9 What are your charges? This will help you uderstad what charges you pay whe you ivest i our bod. We take our charges by takig uits away from your bod. Mothly Maagemet Charge The mothly maagemet charge depeds o the value of your bod, icludig ay mutual bous, at the time each charge is take. The mothly maagemet charge percetage rates for your bod are show i your persoal example ad o your Bod Summary. The charge is take separately from the value of your bod, excludig ay mutual bous, ad from the value of ay mutual bous. For example Tim s bod is valued at 24,000. There is also a 1,500 mutual bous that applies to his bod. Mothly maagemet charges are as follows: Fud value (icludig mutual bous) Below 25, % (1.05%) 25,000-49, % (0.95%) Mothly Maagemet Charge (equivalet yearly charge show i brackets) As Tim s bod value icludig mutual bous is 25,500, the mothly maagemet charge that will be applied is 0.079%. This charge is take separately from the bod value excludig mutual bous ad from the value of the mutual bous, as follows: 24,000 x 0.079% = ,500 x 0.079% = 1.18 Guaratee Charge If you add a guaratee, we ll make a additioal mothly charge for the term of the guaratee. This is added to the mothly maagemet charge. The curret charge for your chose fud optio ad guaratee term is show i your persoal example ad o your Bod Summary. You ca also fid out by callig us o To fid out the latest available guaratee terms ad the charges that would apply if you were to buy a ew guaratee, or replace a existig oe, you ca call us o or look o our website at Oce you ve added a guaratee, the guaratee charge you pay is fixed for the term of the guaratee, based o the curret value of your bod each moth. Our charge for each ew guaratee you add may be higher or lower tha this. If you cacel your guaratee the guaratee charge will stop. Key features of the Flexible Guaratee Bod Series 2 9

10 Admiistratio Charges Chagig your fud optio You ca chage your fud optio up to three times every 12 moths for free. If you make more tha three chages i ay 12 moth period, we ll charge 25 for each extra chage. Addig a ew guaratee If you replace your guaratee more tha oce i ay 12 moth period, we ll charge 25 each time. This is i additio to the guaratee charge. If you re addig a ew guaratee because you re chagig your fud optio, we wo t charge you 25 twice. What might I get back? The value of your bod whe you cash it i will deped o: how much you ivested how well our ivestmets have performed our charges ay moey you ve take out of the bod ad ay moey that s bee paid out to your fiacial adviser o your behalf as ogoig ad ad-hoc adviser charges ay guaratee you ve added ay mutual bous applied tax Your persoal example gives you a idea of what you might get back. Key features of the Flexible Guaratee Bod Series 2 10

11 What happes to my bod if I die or become termially ill? This depeds o how the bod is set up. If you are both the bod ower(s) ad the perso(s) isured, oce a claim has bee made: if you have a sigle life bod, your bod will be cashed i ad paid out if you have a joit life first death bod, the bod will be cashed i ad paid out whe either of the people isured dies or becomes termially ill if you have a joit life secod death bod, if oe of the people isured dies or becomes termially ill, the bod will cotiue for the beefit of the survivig perso. If oe of the people isured has already died ad the secod perso isured either dies or becomes termially ill, the bod will be cashed i ad paid out. If you are the bod ower(s), but ot the perso isured, it is the perso or people isured who are covered by the life ad termial illess cover icluded i this bod. By termial illess we mea a icurable illess where, i the opiio of a attedig cosultat ad our Chief Medical Officer, the perso isured would ot be expected to live for more tha 12 moths. If your bod is cashed i because of death or termial illess, the amout payable will deped o the age of the perso isured at the start date of the bod. If there are two people isured we use the age of the older life for bods set up o joit life first death basis ad the youger life for bods set up o joit life secod death basis. If the perso isured is uder age 80 at the start date we ll pay out the greater of: 101% of the value of your bod Or the amout of your origial ivestmet, less ay withdrawals take (icludig ay moey that s bee paid out as ogoig ad ad-hoc adviser charges). Ay mutual bous will be added to the amout paid out. If the perso isured is aged 80 or over at the start date we ll pay out 101% of the value of your bod. Ay mutual bous will be added to the amout paid out. Please see Coditio A4 of the Bod Coditios for further explaatio of how we calculate the value of your bod. Please cotact us if you wat to make a life cover or termial illess claim. You ca do this i writig, or by phoe. You ca call us o We ll ask the perso makig the claim to complete a claim form, which we ll sed to them at the time. We ll also ask them to sed ay documetatio that we eed alog with the completed claim form. Please see Coditio B3 of the Bod Coditios for more details about makig a claim. Key features of the Flexible Guaratee Bod Series 2 11

12 What about tax? You wo t have to pay ay capital gais tax or basic rate icome tax o moey take out of your bod as we ve already paid tax o icome ad gais. This tax ca t be reclaimed, eve if you re a o taxpayer. Each year up to 5% of the amout you ivested ca be take out ad you wo t have to pay ay additioal icome tax at that time. We call this your 5% allowace ad if you do t use it i ay year it ca be carried forward. If you re a higher rate tax payer, or you become a higher rate tax payer because of the gai o your bod, you ll have to pay more tax: o ay gai whe you fially cash i your bod, or if you take out more tha your 5% allowace i ay year - icludig ay moey paid out to your fiacial adviser o your behalf as ogoig ad ad-hoc adviser charges. If you do t take the full 5% i ay year, ay uused amout ca be rolled forward to later years We ll tell you if there is a gai o which you might eed to pay tax. If you qualify for age allowace or govermet tax credits you could lose some or all of these beefits if you make a profit whe you cash i your bod or more tha your 5% allowace is take out. If your bod is set up uder a trust you might have to pay icome tax o ay gai. Your bod will be issued as a series of 50 idetical policies which gives you flexibility to cash i idividual bods ad ca also have tax plaig advatages. This is oly a summary. Please speak to your fiacial adviser if you eed more iformatio as this will deped o your persoal tax positio, which might chage i the future. Ay refereces we make to taxatio are based o our uderstadig of curret legislatio ad HM Reveue & Customs practice, which ca chage. Key features of the Flexible Guaratee Bod Series 2 Ca I chage my mid? Whe we sed you your bod documets we ll remid you that it s your legal right to chage your mid. You ca cacel your bod withi 30 days of gettig your documets. If you do wat to cacel, just fill out the form ad sed it back to us at LV=, Ivestmet Bod Admiistratio Team, Couty Gates, Bouremouth, BH1 2NF. If you sed us your cacellatio form withi 30 days of receivig it, we ll refud ay moey you ve paid ito your bod. Please ote, if you ve istructed us to pay ay adviser charges ay amouts already paid or due to be paid will be deducted from the amout we refud to you. You ca still cacel your bod ay time after these 30 days but you may get back less tha you ivested. 12

13 How much will the advice cost? If you eed advice about whether this bod is suitable for your eeds, please cotact your fiacial adviser who will give you details about the cost of providig advice. If you ask us to, we ca pay ay adviser charges to your fiacial adviser o your behalf, or you may agree to pay your fiacial adviser directly. If you ask us to pay them o your behalf, ay iitial adviser charge will be paid before ay moey is ivested ito your bod. Ay ogoig or ad-hoc adviser charges will be paid out of your bod ad treated as withdrawals. How will I kow how my bod is performig? Every year we ll sed you a statemet showig how your bod is performig. You ca check the uit price by callig your fiacial adviser or lookig o our website at Key features of the Flexible Guaratee Bod Series 2 13

14 Further Iformatio Retail Customers We re required by our regulator, the Fiacial Coduct Authority, to categorise our customers to determie the level of protectio they ll receive. If you ivest i our bod described i this Key Features documet we ll treat you as a retail cliet. This gives you the highest level of protectio available uder the Fiacial Coduct Authority rules. Terms ad Coditios This Key Features documet gives you a summary of our bod. You should also see Your guide to how we maage our with-profits fud ad the Bod Coditios for further details. Law The bod is govered by the law of Eglad as applied by the courts for that part of the UK where you live. We ll always commuicate i Eglish. Complaits If you have a complait about ay part of the service you receive from us, it s importat that we kow about it, so we ca help put thigs right. You ca let us kow by callig us o (for textphoe, dial first). Or, you ca write to us at: Box 2, LV=, Couty Gates, Bouremouth. BH1 2NF. Your complait will be dealt with promptly ad fairly ad i lie with the Fiacial Coduct Authority s requiremets, ad if you wat more iformatio o how we hadle complaits, please cotact us, or visit We hope that we will be able to resolve ay complait that you have. If you re uhappy with the resolutio of your complait, the Fiacial Ombudsma Service may be able to help you free of charge, but you ll eed to cotact them withi six moths of receivig our fial respose letter. Their website is which icludes more iformatio about the service, icludig details of the various ways they ca be cotacted. If you make a complait it wo t affect your right to take legal actio. Key features of the Flexible Guaratee Bod Series 2 Compesatio We ve bee i busiess sice 1843, ad take great care to maage our affairs sesibly. If we ever did get ito fiacial trouble ad could t hoour our commitmets, you would be etitled to compesatio from the Fiacial Services Compesatio Scheme. The compesatio you could get depeds o the type of product you have. For this type of bod, the scheme covers 90% of the claim. From 3 July 2015, this will chage to 100% of the claim. The scheme s first resposibility is to seek cotiuity rather tha to pay compesatio. For more iformatio go to or call or

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16 LV.com You ca get this ad other documets from us i Braille, large prit or o audio by cotactig us. Liverpool Victoria Friedly Society Limited: Couty Gates, Bouremouth BH1 2NF. LV= is a registered trade mark of Liverpool Victoria Friedly Society Limited (LVFS) ad a tradig style of the Liverpool Victoria group of compaies. LVFS is authorised by the Prudetial Regulatio Authority ad regulated by the Fiacial Coduct Authority ad the Prudetial Regulatio Authority, register umber Registered address: Couty Gates, Bouremouth BH1 2NF. Tel: /15