Selecting a guarantee period
If your client were to die at any point after purchasing their GIfL, and if they had not selected a guarantee period, dependant's pension or value protection, their income would stop and no further payments would be made.
Helping clients protect the value of their pension
It may not be of concern, but should your client wish to, they can incorporate a guarantee period within their solution to ensure that income will continue to be paid until the end of the guarantee period – up to 30 years from their first payment.
See below for an overview of how this option can work.
Points to consider
- Your client can choose a guarantee period between one and thirty years.
- There is a cost associated with this choice – the longer the guarantee period, the lower the annual income the client receives will be.
- They can nominate anyone to receive the income from the guarantee in the event of their death.
- If they live past the guarantee period, then their income continues, but in the event of their death, the income will just stop (if no other options have been chosen).
- From 6 April 2015, where an individual under the age of 75 dies on or after the 3rd December 2014, and has a guaranteed period, any payments made to beneficiaries will be tax-free. If they die after the age of 75, the income will be taxed at the beneficiaries marginal rate of tax.