Child Tax Exempt Savings - Frequently Asked Questions
What is a Child Tax Exempt Savings Plan?
A Child Tax Exempt Savings Plan is a savings plan designed to provide a tax-efficient lump sum for your child at the end of a specified term of years.
There is a guaranteed minimum cash amount payable at the end of your chosen term, subject to all monthly premiums being paid. This will not be less than the amount you have paid in.
The Child Tax Exempt Savings Plan is a With Profits policy. Bonuses are intended to be added yearly to the basic sum assured - with the possible addition of a final bonus being paid at the end of the term. Once bonuses are added they cannot be taken away and may increase the eventual cash payment, although they are not guaranteed. Bonuses will depend on the future investment performance of the With Profits Fund and how Foresters Friendly Society decide to distribute any profit. For more detailed and technical information about how we manage the fund please read our ' How you share in the profits of Foresters'.
The policy can be taken out for a fixed term, which may be 10 to 25 years, however the child must have attained 16 years of age before proceeds are payable. Under the Society's rules, the child would become an adult in insurance terms when they reach their sixteenth birthday.
Can I choose how much my monthly premium is?
Yes. If you apply for our Child Tax Exempt Savings Plan online the monthly premium you can choose is between £15 to £25. If you apply by post the monthly premium is fixed at £25. We will collect your payments by Direct Debit from your bank.
Under current legislation, each person (including children) can save up to £25 a month in a Friendly Society Tax Exempt Savings Plan. The payment limits apply to all such plans held in the person's own name. Any premiums above these limits will need to be invested in the Society's other savings plans which may not be as tax-efficient e.g. an ISA or Bond.
If you already have a Child Tax Exempt Savings Plan, and your monthly premium is less than £25, you can increase your monthly contributions. Please contact the Member Services team on 0800 783 4162 for further details.
What might the plan be worth at the end of the term?
The child will receive the value of the plan at the end of the term. This depends on the length of time you save for. The amount received is made up from a guaranteed minimum amount, plus any added annual bonuses during the term. There may also be a final bonus added at the end of the term, but this is not guaranteed. The cash lump sum is guaranteed and will not be less than the amount you have paid in.
What happens if I, or the child, dies?
If the child dies a cash lump sum will be payable to the child's estate. The amount will not be less than the premiums paid. The plan does not protect against the financial consequences of death. If you die whilst paying premiums on behalf of a child someone else can take on the policy. Please contact us if you need to do this.
What happens if I stop paying?
If you stop paying in the first year the plan will lapse with no value. After one year you can apply for the plan to be made a paid up plan, but this means that the guaranteed maturity amount will be reduced. If you stop paying your premiums you are unlikely to get back as much as you have paid in especially in the early years.
Can I stop and start my premiums?
The Child Tax Exempt Savings Plan is designed to be a long term regular fixed commitment. Tax regulations mean you cannot normally stop payments for periods of time and restart them later.
I'm not sure if the Child Tax Exempt Savings Plan is right for me. What should I do?
If you are unsure as to the suitability of this product you should seek advice from an Independent Financial Adviser. You may have to pay for this advice.
