Understanding your OneFamily savings contract

Tax Exempt Savings Plans (TESPs) are a specific type of “qualifying policy”, which is a type of life insurance policy that isn’t subject to Income Tax or Capital Gains Tax. And, because your product is a TESP, the fund your money is invested in isn’t taxed either.

So, no, you don’t need to pay tax when you take your money out, but only as long as the HMRC conditions of the qualifying policy are met.

The mains ones are that you must:

• keep your money invested in the TESP for at least 10 years
• keep up regular payments

You can find out more on the HMRC website.

We will write to you shortly after your payment fails to let you know that we haven’t been able to collect your regular payment.

You’ll then have 13 months to make up the missed payment. If you miss more than one payment, you’ll need to make all the missed payments in one lump sum.

If it’s been more than 13 months since you missed a payment and you haven’t made it up, we will have stopped providing life cover with your savings plan.

How this affects you depends on when you stopped paying:

• If you stopped paying premiums within the first year of opening the TESP, the plan will have no value so you won’t be able to withdraw any money and there will be no payment paid on your death.
• If you paid premiums for at least the first full year but stopped paying them before 10 years, you won’t be entitled to the guaranteed death benefit but your savings plan will be worth the value of the units invested (the exact amount depends on the number of units and their value). If you die before taking your money, your estate will receive the value of the units.
• If you’ve paid into your TESP for 10 years or more, your savings plan will be worth the value of the units. If you die before taking your money, your estate will receive either the value of the units or the guaranteed minimum death benefit, whichever is higher.

If you stop paying money into your existing TESP, you are likely to be eligible to take a new replacement Family Bond.

But, as TESPs require you to commit for a 10 year term and can’t be changed once started, it’s worth considering if a different product might be better for you, such as a Stocks and Shares ISA.

When you took out your TESP, you will have been asked if you’d like to nominate a beneficiary. This person will receive a pay-out in the event of your death.

The exact amount that they receive will depend on the amount you're paying and the initial payment term. If the amount invested in your TESP is higher than the amount of life cover, we’ll pay the current value.

We’re able to pay up to £5,000 of the amount you’re entitled to before your estate (financial affairs) are settled, which could be used towards funeral costs.

If you’re not sure who you nominated as your beneficiary, didn’t nominate anyone and would now like to do so or if you’d like to change who you nominated, please give us a call on 0344 8 920 920*.

Placing your TESP under trust

It’s also possible to place your TESP under trust as it’s classed as a life insurance policy. If you’d like to make sure all the benefits of your policy go to your chosen beneficiary, and/or you want the value of these savings to be outside your estate, this might be a useful option for you.

Trust law is complex, so we don’t provide a default trust deed as it may not be suitable for everyone. We recommend you seek advice from a suitably qualified professional.

While you’re sorting out your life admin, now might be a good time to make sure your next of kin is aware of all your policies and accounts. Our everything in one place form is a free resource to help you do this.

*We’re here Monday to Friday 9am – 7pm, and on Saturdays 9am – 1pm, UK time. Calls may be recorded and monitored for training purposes.

You can keep paying into an existing TESP if you move overseas, as long as the payments are from a UK bank account.

Or, if you’re thinking of moving abroad, it may be possible to pay the remaining premiums in one go without losing the policy’s tax-free status.

However, you won’t be able to open a new savings plan once you move overseas, unless you are a government employee stationed overseas.

If you’re a US citizen then you won’t be able to open this type of product, regardless of where you live.

Call us on 0344 8 920 920 to discuss your options. Our overseas number is 0044 1273 062512.

Our call centre is open Monday to Friday 9am – 7pm, and on Saturdays 9am – 1pm, UK time. Calls may be recorded and monitored for training purposes.

At the end of your payment term, there will usually be four choices:

• Extend the payment term by 10 years
• Leave the money invested in a tax-exempt fund and make no more payments
• Take some of the money, leaving the remainder invested (we will let you know the minimum that you need to leave in to take this option)
• Withdraw all the money

We’ll write to you towards the end of your payment term to remind you of your choices, please make sure you keep us up to date with any changes to your contact details.