KEY FEATURES OF RELEVANT LIFE COVER SCOTTISH WIDOWS PROTECT. Important information you need to read

Transcription

1 KEY FEATURES OF RELEVANT LIFE COVER SCOTTISH WIDOWS PROTECT Important information you need to read

2 THE FINANCIAL CONDUCT AUTHORITY IS A FINANCIAL SERVICES REGULATOR. IT REQUIRES US, SCOTTISH WIDOWS, TO GIVE YOU, THE EMPLOYER, THIS IMPORTANT INFORMATION TO HELP YOU DECIDE WHETHER OUR RELEVANT LIFE COVER UNDER A SCOTTISH WIDOWS PROTECT PLAN IS RIGHT FOR YOU AND YOUR EMPLOYEE. IF YOU RE SETTING UP MORE THAN ONE RELEVANT LIFE POLICY, WE LL SET UP EACH POLICY SO THAT IT IS LEGALLY SEPARATE FROM ANY OTHERS IN THE PLAN. ITS AIMS RISKS Relevant Life Cover is a single life policy designed to protect your employee, whilst employed by you. It aims to pay out a cash lump sum if the employee: dies during the policy term, or is diagnosed with a terminal illness during the policy term. YOUR COMMITMENT To pay the premium for the policy by monthly Direct Debit until the end of the policy term or until your employee leaves your company. To tell us if the employee covered by the policy is no longer employed by your business. To seek advice and arrange a suitable trust to make sure the policy meets HM Revenue and Customs (HMRC) conditions to be tax deductible for your business s circumstances. This has to happen before the policy can start. To ensure you and your employee answer all questions in the application honestly and fully. If you stop paying premiums, the cover will end as we ll cancel the policy, and we won t refund any money. If the policy isn t written in trust then this will impact the favourable tax benefit, and the policy will be treated as an ordinary life policy. Tax legislation can change so there is no guarantee that the favourable tax position of the trust will apply in all cases. If your employee s circumstances change, the cover may not continue to meet their needs. Any changes to the policy could cost you more. We may not pay any claim, amend the terms of your employee s cover or even cancel their cover if either you or your employee: don t answer the questions honestly, or give us incomplete or misleading answers, or don t advise us of a change in your answers to our questions before the date we agreed the terms of your employee s cover. We will have agreed the terms once we have your confirmation that all the application answers are true and complete and we have written to you after that confirming our terms. For more information on when we might not pay a claim please see When we might not pay out on Page 4. This policy has no cash-in value at any time. 1

3 QUESTIONS & ANSWERS WHAT IS RELEVANT LIFE COVER? It s a life cover policy that allows small businesses to provide death-in-service benefits for an employee, without the need to set up a group life scheme. Its main purpose is to give financial protection to your employee s spouse, partner or dependants, by paying out a cash lump sum on death or diagnosis of a terminal illness. This is achieved by having a suitable trust in place. The premiums are paid by you and are usually treated as a business expense by HMRC, so it can be a tax efficient way for small businesses to provide benefits for their employees. WHO CAN TAKE OUT THIS POLICY? The minimum age for an individual to be covered by a policy is age 18 and the maximum age is 73. To be covered for this policy, individuals should be habitually resident in the UK (excluding the Channel Islands and the Isle of Man). The business taking out the policy must be legally set up in the UK and have a UK bank account. WHAT ARE THE COVER LIMITS? The maximum amount you can cover your employee for under our Relevant Life Cover policy for a policy that doesn t increase is 25,000,000, and the minimum is 25,000. Where you have chosen a policy with increasing cover, the maximum amount is 15,000,000 and the minimum is 25,000. The minimum term of the policy is 1 year, and the maximum term will depend on what age your employee is when you take out a policy, as cover stops at age 75. Once you have selected one policy you can then add additional policies to your plan from a minimum of 2,000. WHEN DO WE PAY OUT ON TERMINAL ILLNESS? We will pay out on a terminal illness if: the illness either has no known cure or has progressed to the point where it cannot be cured; and in the opinion of the attending consultant, the illness is expected to lead to death within 12 months. You must tell us about the diagnosis before the end of the policy term and if we pay out a terminal illness claim the policy will end. WHAT ARE THE OPTIONAL FEATURES? Increasing Cover Increasing cover is designed to protect the policy against inflation and it will automatically increase the cover amount each year in line with the Retail Prices Index (RPI). The increases will be at least 2% up to a maximum of 10%. If you want to include this it must be selected at the start of your policy as it can t be added later. The premiums will also automatically increase but at a higher rate. Depending on the circumstances, this increase can be significant. This is explained in the policy provisions but we will tell you at each increase what the premium will be. You can decline an automatic increase for a year but if you decline the increase two years in a row, the increasing option will stop and you won t be able to add it again at a later date. Guaranteed Insurability Options You may be able to increase your sum assured during the term of your policy, without the need for further underwriting. You can find a full list of the events and conditions that apply in your policy provisions. Free Accidental Death Cover Your employee may qualify for free accidental death cover while we are considering their application. If you want more information please ask your financial adviser for a copy of the Free Accidental Death Cover leaflet. 2

4 HOW FLEXIBLE IS THE POLICY? At any time you or your financial adviser can ask us to reduce or increase the amount of cover. We ll need to ask your employee more medical questions before we can increase the amount of their cover. Reducing or increasing the cover may change the premium you pay. WHAT HAPPENS IF MY EMPLOYEE STOPS WORKING FOR ME? If your employee leaves your employment, there are three options: Continuing the cover with a new employer The policy can continue to be held in the Relevant Life Cover trust when the employee starts new employment if the new employer agrees to take over responsibility for the policy and trust. The new employer becomes responsible for paying the premiums and replaces you as the trustee. A formal document is needed for this to happen so please speak to your financial adviser. Transfer of the policy to your employee You, and any other trustees, can transfer the ownership of the policy to the employee by assigning the policy out of the Relevant Life Cover trust to the employee in his/her own name. A formal document is needed for this to happen so please speak to your financial adviser. If this option is chosen then cover for terminal illness will no longer apply and there will be tax implications if the policy is no longer held in the Relevant Life Cover trust. Cancelling the policy You or the trustees can cancel the policy at any time by getting in touch with us. The policy would stop and no further premiums would be taken. HOW MUCH WILL THIS COST? Your premium will be shown on the quote. This depends on, for example: the amount, the basis (level or increasing) and term of cover chosen, your employee s age, your employee s health, whether or not your employee smokes or uses nicotine replacements. Our charges are included in the premium and cover the cost of commission, expenses, profit and any other adjustments. WHAT ABOUT TAX? The policy is based on our understanding of current laws and tax rules, however, tax legislation may change and this could impact tax efficient benefits. Please speak to your financial adviser for further details. Under current tax rules, any cash sum paid out under the benefit should be free of personal income tax and capital gains tax. This policy will be written in trust and shouldn t form part of your employee s estate. This benefit does not form a Benefit in Kind tax liability for your employee. Tax rules and individual circumstances may change in the future. CAN I CHANGE MY MIND? Yes, you can change your mind and cancel this policy at any time. If you cancel within 30 days of the start date, which you ll find on the policy schedule, you will get back any premiums you have paid. 3

5 HOW TO CLAIM If you need to make a claim you can phone us on the numbers below: for life cover claims call for terminal illness claims call We may record and monitor calls to help us to improve our service. WHEN WE MIGHT NOT PAY OUT We may not pay out if: you or your employee have not answered all the questions on our application honestly and in full. you or your employee do not tell us about any changes to the information you gave us on the application before the date we have agreed the terms for your cover. your employee intentionally takes their own life in the first 12 months from the start date of the policy, or they have a terminal illness and they are expected to live for more than 12 months. When claiming, you need to give us proof about events resulting in the claim; otherwise, we may not pay out. We may not pay a claim if we don t have authorisation to obtain medical information about your employee either. HOW TO GET IN TOUCH WITH US If you have any general questions or any changes you want to make to your policy please get in touch. You can phone, send us a fax, or write to us. Call us on during the following times: Monday to Friday from 9am 5.30pm We may record and monitor calls to help us to improve our service. Fax number Website Office address Scottish Widows 15 Dalkeith Road Edinburgh EH16 5BU If you d like this document in another format such as large print, Braille or audio you can call us on We ll communicate with you in English. During the application process we may add further limits or exclusions to the policy. If we do, we ll tell you before you make your decision to go ahead with the cover. IS THE POLICY WRITTEN IN TRUST? Yes, you must write your policy under a Relevant Life Cover Trust. 4

6 FURTHER INFORMATION HOW TO COMPLAIN We hope that you don t have to complain but if you do, please get in touch with us so we can make things right. If you re not satisfied with our response, you can complain to: The Financial Ombudsman Service, Exchange Tower, LONDON E14 9SR Tel complaint.info@financial-ombudsman.org.uk Website Complaining to the Ombudsman won t affect your legal rights. TERMS AND CONDITIONS These key features give a summary of our Relevant Life Cover as part of our Scottish Widows Protect Plan. Further details of the cover, and terms and conditions are given in the product literature, and policy provisions which are available from us. We can change some of the terms and conditions at any time but we ll write and explain if this affects your employee s cover. LAW For legal purposes the law of England and Wales, Scotland or Northern Ireland will apply, according to where your registered office is at the start date of the policy. SOLVENCY II RETURNS Our Solvency and Financial Condition Report (SFCR) and associated solvency reporting templates can be found via our website at: us/financial_information/solvency-2-returns.html The SFCR is produced annually to help you understand the management and performance of our business, and the strength of our solvency position. For the Scottish Widows Insurance Group, including its three main insurance companies, the report covers key aspects of our: business and performance system of governance risk profile valuation for solvency purposes capital management FINANCIAL SERVICES COMPENSATION SCHEME (FSCS) Your plan with Scottish Widows may be covered by the Financial Services Compensation Scheme. More information about compensation arrangements is available from the Financial Services Compensation Scheme, who can be contacted on or or via their website at This information represents Scottish Widows interpretation of the law and HMRC practices as at date of publication. Changes to tax rules and other laws may affect your contract terms. 5

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8 Scottish Widows Limited. Registered in England and Wales No Registered office in the United Kingdom at 25 Gresham Street, London EC2V 7HN. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Financial Services Register number /17