LV=

Introduction

This unique tool from LV= helps you and your clients make a more informed decision when choosing between a Lifetime and Fixed Term Annuity. Simply click the start button and complete your client's details to view bespoke comparison charts which compare different scenarios.

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How to use the tool

You will need a client-specific quotation for both a Lifetime Annuity and a Fixed Term Annuity to use this tool as you will need to enter certain relevant information from the quotes in order to make the comparisons. We have produced a simple user guide to walk you through how the tool itself works - you can view this by clicking here.

If you need any further help, please speak to your LV= Account Manager.

Assumptions and important notes

The comparison tool and output are provided by LV= for use by financial intermediaries only. If you want to use this with your clients, youРІР‚в„ўre responsible for making sure it complies with the FSA rules for use with them. While every care has been taken to ensure their accuracy, the charts produced by this tool are intended only as a guide as they are based on assumptions about future events which cannot be guaranteed.

More information on how to use the tool and the assumptions made. To begin, please press the start button on the top right.

Assumptions used by the comparison tool:

  1. All charts go out to 30 years.
  2. Allowable ages for the policyholder are from 55 to 90.
  3. All annuities are assumed payable at the end of the policy month or year (often referred to as РІР‚пїЅin arrearsРІР‚в„ў).
  4. The two options compared by this tool are the purchase of a Lifetime Annuity (LTA) at retirement and the purchase of a Fixed Term Annuity (FTA) at retirement. The FTA option consists of holding an FTA for the fixed term and then buying an LTA with the maturity value of the FTA.
  5. The escalation rate input applies both to the FTA and LTA. The LTA bought at the end of the fixed term is assumed to escalate at the same rate as the FTA during the fixed term.
  6. The annuity bought with the proceeds from the FTA is assumed to have no guarantee period.
  7. Where an escalation rate is entered, we have assumed that the first annuity payment received is not escalated.  So if the annuity amount input is Р’Р€5,000, the first annuity payment received will be Р’Р€5,000 even though this payment will be received one month/year after retirement (depending on the payment frequency).
  8. No allowance is made for GAD limits, so the user will have to make sure that any GAD limits which have been applied in their FTA quote are allowed for in the FTA amount input.  It is assumed that escalating annuities are allowed to escalate freely and are not subject to any GAD limits at any point during the fixed term.
  9. Assumed mortality rates and mortality improvements are those currently used by LV=.
  10. All escalation is compound and occurs on the policy anniversary.
  11. The change in circumstances scenario means simply that the joint life status is switched to single life at the end of the fixed term. So in this scenario, someone who purchases a joint-life FTA will be assumed to purchase a single-life LTA at the end of the fixed term.
  12. Other than a change in marital status, no other changes in circumstances are assumed in this scenario.  A deterioration in health is allowed for in the РІР‚пїЅmedical upliftРІР‚в„ў scenario.
  13. Where it exists an option to view the cumulative breakeven point will be displayed, showing each time the total expected payments of a LTA and a FTA crosses. When the total expected payments of the FTA option exceeds those of the LTA option this will be indicated with a green line. And when the total expected payments of the LTA exceeds those of the FTA option, this will be indicated with a red line.
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Client Details

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Member / Spouse Details

Annuity Details

After deduction of any tax-free cash.
Applies to both the lifetime annuity and the fixed term annuity. Percentage between 0% and 10%.

Annuity Details - Specific to Lifetime Annuity

The amount of income shown on the Lifetime Annuity quotation you have received for your client based on the Retirement Fund available.

Annuity Details - Specific to Fixed Term Annuity

Enter the assumed % uplift to standard annuity rates that will be available at the end of the fixed term as a result of a deterioration in health (in addition to any existing uplift in the lifetime rate quoted above).

The following information is a guide as to the sort of rate uplifts currently available for people who qualify for an enhanced annuity:
  • Up to 10% = Mild conditions (e.g. high blood pressure, high cholesterol, raised BMI, diet controlled Diabetes)
  • 10 to 25% = Moderate conditions (Tablet controlled diabetes, Smoking, Heart attack, Angina, Heart Bypass, Multiple Sclerosis, Parkinson's)
  • 25%+ = Serious conditions (e.g. Heart Failure, Aggressive Cancer, Alzheimer's, Dialysis)

On completion please click the calculate button below to see your results.

  • Annuitant's health and personal circumstances haven't changed by the end of fixed term annuity

  • Annuitant's health deteriorates by the end of fixed term annuity

  • Annuitant's spouse dies or separation by the end of fixed term annuity

  • Annuitant's health deteriorates and spouse dies/separation by the end of fixed term annuity

  • View print report

The effect of a total 0% absolute change in interest rates by the end of the fixed term.