Glossary
Below is an explanation of some of the terms that we use in this website which may be unfamiliar to you:
Annual Management Charge (AMC)
A charge made over the year which includes the fees for the fund manager, the custodian bank and third party administrators. It is deducted on a daily basis from the entire fund through an adjustment in the unit price.
Appointed Actuary
An actuary is a business professional who deals with the financial impact of risk and uncertainty. Watson Wyatt (Ireland) Ltd is Life Trust's appointed actuary, advising us on all aspects of financial condition and risk management within our business.
Birthday Units
Additional fund units allocated to Planholders on their birthday according to an actuarial calculation. These units arise from the redistribution of the investment funds held by Planholders who have not survived.
Capital Content
The payments from a Longevity Income Plan are regarded as being made up of two parts for tax purposes. The first part is 'capital content' which is looked upon as a return of the Planholder's original investment and is currently not subject to UK income tax. The second part is the 'interest' element and because this is classified as income, it is subject to UK income tax.
Death Benefit
If a Planholder dies before receiving any payments or the full value of their original investment back in annual payments, we'll pay the difference to the Planholder's estate, assignees or trustees. This is known as a Death Benefit.
FSA
The UK Financial Services Authority. An independent body which regulates the financial services industry in the UK.
Gross Roll-up
A benefit of offshore investments where the growth from the investment is rolled up free of UK income or capital gains tax.
HMRC
Her Majesty's Revenue & Customs. They ensure the correct tax is paid at the right time.
Income Start Date
The date Planholders receive their first annual Plan payment. This will be their 75th or 80th birthday, depending on which Vesting Age they choose.
Inheritance Tax (IHT) Planning
Financial planning to protect your assets from being liable to inheritance tax.
Longevity Income Plan
A single premium investment designed to provide a rising income for up to 20 years, starting from either age 75 or 80.
Mortality Uplift
The unique feature of the Longevity Income Plan. Every year, the value of investments held by Planholders who have not survived is redistributed to all other Planholders as 'Birthday Units'. The effect of the Birthday Units is to further enhance the growth potential of Planholders' investments, resulting in what we call a 'mortality uplift'.
Longevity
A term that means long life. We especially use this when it concerns people living longer.
Purchased Life Annuity
An annuity is a contract with a life company where you pay in a lump sum in exchange for a regular income, either for life or for shorter periods.
A purchased life annuity is purchased from personal assets or 'capital' rather than from the proceeds of a pension scheme. This means that a portion of the income from the purchased life annuity is exempt from income tax, being treated as a return of capital.
Vesting Age
The age at which a Planholder opts to begin receiving payments under the Longevity Income Plan. Planholders may choose a Vesting Age of either 75 or 80, which cannot subsequently be altered.