Important Notes
These notes shall be read in conjunction with the Policy Account Statement

Policy Account

The Policy Account Balance represents the accumulation, at the bonus rates declared by MAPFRE MSV Life p.l.c. (MAPFRE MSV) from time to time, of the Investment Premiums received less policy charges if any. The Policy Account Balance shown in this statement excludes any Premium and/or Policy Loans and accrued interest payable by the Policy Owner under the policy, and therefore any such policy loans and interest must be deducted from the Policy Account balance to arrive at the investment value of the policy.


Regular Bonuses

Policyholders investing in MAPFRE MSV’s With-Profits Fund participate in the distribution of profits of the MAPFRE MSV with-profits fund by means of an allocation of annual Regular Bonuses declared from time to time. The Regular Bonus Rates are usually expressed as a percentage of the Policy Account Balance.

Once declared, Regular Bonuses are guaranteed to be paid in full at maturity or on the prior death of the Person Covered. However, should the policy be surrendered, MAPFRE MSV will not pay the Regular Bonuses in full but will apply the Cash Surrender Value penalties, applicable at that time, to the Policy Account which will include Regular Bonuses Declared up to the date of surrender. A Market Value Reduction may also be applied by MAPFRE MSV to the Policy Account, including the Regular Bonuses already declared. The purpose and operation of a Market Value Reduction is explained hereunder.

Regular Bonuses are calculated on a daily basis from either the date on which MAPFRE MSV receives the premium or the premium due date, whichever occurs later.


Final Bonus

Depending on its profits experience, MAPFRE MSV may, after the end of the plan’s tenth year, or after ten years full premiums have been paid, decide to allocate from time to time a Final Bonus in addition to other declared bonuses. Such Final Bonus will normally be expressed either as a percentage of the Policy Account or as a nominal amount. A Final Bonus, if declared, is payable on policies that become claims by maturity or death, but not by surrender. Policy owners should be aware that Final Bonus rates are likely to be highly volatile and very dependent on the investment performance of MAPFRE MSV.

It is to be noted that where additional non-contractual top-up premiums have been made, a separate Final Bonus will be calculated and paid on the value of the policy account of each top-up contribution, provided that, the said top-up contribution was made more than 10 years before the maturity date of the plan or the date of death of the person covered, if earlier. The percentage of the Final Bonus granted in respect of each top-up contribution will vary according to the length of investment in the With-Profits Fund of each contribution.


Cash Surrender Value

Cash Surrender and Paid-Up Policy Values are determined at the discretion of MAPFRE MSV. The Paid-Up Policy Value will normally be equal to the Cash Surrender Value.

The primary factor affecting the level of Cash Surrender Value is the investment return earned on the assets of the MAPFRE MSV with-profits fund. In addition, the Cash Surrender Value is affected by the expenses, tax and the cost of risk benefits (such as life cover) borne by the MAPFRE MSV with-profits fund and deductions to provide a return to shareholders. The expenses include payment of commission, medical report expenses, office administration costs, investment management fees and other expenses incurred in setting up the policy.

At most the Cash Surrender Value will be the amount of the Policy Account reduced by the Surrender Charge (where applicable), but MAPFRE MSV reserves the right to increase the level of Surrender Charge and, if necessary, to apply a Market Value Reduction (MVR). A Market Value Reduction is a deduction, which MAPFRE MSV may make on surrender of a Policy. For example, if the underlying investment return after allowing for expenses, tax, risk benefits and shareholder deductions is less than the return already provided for in the form of Regular Bonuses, MAPFRE MSV may decide to apply a Market Value Reduction to reduce the Cash Surrender Value.

The Market Value Reduction serves to protect the interests of both investors who remain in the MAPFRE MSV with-profits fund and MAPFRE MSV, who would otherwise have to supplement the amount paid on surrendering policies. MAPFRE MSV does not apply a standard percentage deduction on all Policies but determines the deduction to apply to each individual surrender at the time the surrender is made. The amount depends on a number of factors including the length of time the Policy has been in force and the underlying investment return over the same time period. There will be no Market Value Reduction at maturity or on death. This means that at maturity or on death the payment of the Policy Account is guaranteed.

The Cash Surrender Value may be less than the total amount of premiums paid up to the date of surrender. Any amounts due to MAPFRE MSV will be deducted from such Cash Surrender Value.


Bonus Philosophy

MAPFRE MSV’s continued bonus philosophy is that the combined return to policyholders from Regular and Final Bonus rates should reflect the policyholders’ share of the profits made on the with- profits business. MAPFRE MSV aims to achieve a fair and equitable distribution of these profits between different generations and types of with-profits policies.

It is important to note that the profits made on with-profits business depend primarily on the investment returns earned on the underlying investments. Although MAPFRE MSV aims to provide policyholders with some protection from fluctuations in the investment markets by smoothing Regular Bonus rates from year to year, Regular Bonus rates may vary significantly over the lifetime of the Policy.

Investment returns can go down as well as up and therefore past performance is not necessarily a guide to the future. It is not possible to predict what the bonus rates will be in future and they may be higher or lower than their current level.

The bonus philosophy of MAPFRE MSV is centred on the ability to pay supportable bonus rates to with – profits policyholders in the medium to long term. MAPFRE MSV may review its bonus philosophy in the light of changes in economic conditions.


Policy Loans / Automatic Premium Loans

In some cases, the value of the with-profits policy can be used to provide security for a loan. It may also be the case that an automatic premium loan is granted to prevent a policy from lapsing in the event that a premium payment is late. In either case the loan, as well as any interest charged, must be repaid before a policy claim will be honoured or a maturity payment made. MAPFRE MSV may offset the value of any outstanding loan amounts against any payments made in connection with the policy.


Tax Position of With-Profits Policies

Policyholders of with-profits policies are currently not liable to any personal or capital gains tax irrespective of whether the Policy is surrendered or left to mature. Similarly, dependants will not be liable to any tax if they receive payment under this Policy by virtue of the premature death of the Person Covered. Tax treatment depends on individual circumstances and is based on current tax legislation which may change in the future.


Verżjoni bil-Malti ta’ dan id-dokument tista’ tintalab mingħand MAPFRE MSV Life p.l.c.

MAPFRE MSV Life p.l.c. (C-15722) is authorised by the Malta Financial Services Authority (MFSA) to carry on long term business under the Insurance Business Act. MAPFRE MSV Life p.l.c. is regulated by the MFSA. MMSV070422