The Skandia Plan

The Skandia Plan pays a cash sum on death and will cover you throughout your life. It is a unit-linked whole life insurance policy, which combines life cover with investment benefits.

We pay a cash sum when you die or, if you have chosen to include total disability benefit at an extra cost, if you become disabled and are unable to work again.

Part of each payment you make is put into investment funds of your choice. We take some money out of the funds each month to cover the cost of your protection and our charges. If the funds you invest in perform better than expected, your fund can grow beyond the amount needed to provide the protection. If they don’t, you may have to increase your payments to keep the same level of cover.

The Skandia Plan gives you access to over 500 funds from more than 40 fund managers.

Benefits

The Skandia Plan combines protection for you and your family, with the opportunity for the policy’s value to grow.

You can also use it to help pay any inheritance tax which may be due when you die. If you put The Skandia Plan in a suitable trust, the cash sum can go to the people you want to benefit, and it can have inheritance tax benefits. Your financial adviser can provide further information on trusts.

The Skandia Plan includes flexibility to vary the levels of protection and investment to suit your lifestyle needs. It allows you to increase your cover each year to offset the effects of inflation, without giving us more information about your health, even if it has worsened. You also have the chance to increase your cover following certain events in your life, such as marriage or retirement.

You can extend your cover by adding the following benefits to your plan at an extra cost:

• total disability benefit
• waiver of premium benefit.

The Skandia Plan can cover you alone, you and another person, or other people in whose lives you have a financial interest.

Risks

If you cash in the plan you may get little or nothing back.

If you stop making regular payments your life cover will stop once the value of your plan is zero.

After ten years, you may need to increase payments to make sure your cover lasts for as long as you need it.

The value of units can go down as well as up and any growth cannot be guaranteed.

Who can take out The Skandia Plan?

You must be a resident of Great Britain, including the Channel Islands and the Isle of Man.

Minimum and maximum ages

The person who owns the plan must be 18 or over.

Anyone insured by the plan must be between 18 and 80 at the start of the plan.

Minimum payments

£20 a month or £200 a year.

Qualifying status

The Skandia Plan is recognised by HM Revenue & Customs as having 'qualifying status', which means that normally no income or capital gains tax is due on payouts from the plan, even if you are a higher rate taxpayer.

In order to preserve this status, a minimum cover level must be maintained, usually 75% of all payments made from the start of the plan to the 75th birthday of the person or people insured.

What level of premiums can I choose from?

The types of cover available, based on the payments you make, are:

• Minimum premiums, which means that less is invested to build up the value of your plan. You are likely to have to increase your payments significantly at the ten-year review and further into the future.
• Standard premiums are higher, so more is invested to build your plan’s value. We work out how much you need to pay to keep the same level of premiums throughout your life, provided your chosen investments grow by 6% a year. However, if the funds do not grow by that much or other costs increase, you may need to pay more in the future.
• Maximum premiums give you the highest possible level of investment in the value of your plan. It is less likely that you will need to increase your premiums to keep the same level of cover.

You can also choose any level of premiums between minimum and maximum as described above.

Guarantees

We guarantee your cover for ten years from the start of your plan, if you keep making your payments.

Charges

We will take charges from your plan to pay for your life cover and any health cover you have chosen, for administering your plan and for management of the funds.

This web page is only intended as a general introduction to The Skandia Plan. You can find full details in the key features document and in explaining the skandia plan, available from your financial adviser.

This information is based on Skandia's interpretation of the law and HM Revenue and Customs practice at 1 July 2009. While we believe this interpretation is correct, we cannot guarantee it. Tax reliefs and tax treatment of investment funds may change in the future.

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Information on this website is not intended for Hong Kong residents. Information on this website about Skandia Group Companies is intended for UK residents only, unless it relates to Royal Skandia, Skandia Life Norge or Suomen Sivuliike. Skandia Group companies do not offer investment advice and no information on this website should be construed as such.

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