View payments from a widow's pension in the Let's See charts
Usually the easiest way to see the effect of payments from a widow's pension would be to create a what-if plan modelling the earlier than expected mortality of your client.
Note: There is also a video on how to use replacement mortality events on our YouTube channel.
1. Click What-if, top left.
2. Enter a name of the scenario.
3. Go to the Time screen.
4. Select the name of the person whose early mortality is to be modelled.
- The primary client (the first person entered when creating the plan) will be selected by default.
5. Drag and drop a replacement Mortality event for this person from the palette above onto the timeline below. You can reposition the event anywhere on the timeline in a moment.
6. When prompted, select Yes to replace your client's original Mortality event with the new one.
Note: Replacement mortality events can only be used in what-if plans, not while viewing the Base Plan. If you attempt to add a replacement mortality event to the Base Plan, a message will appear stating that the person selected already has a mortality event.
7. Position the replacement mortality event in a year when this person's employment is still active and/or final salary is still actively accruing (not after the scheme is deferred or in payment).
8. Go to the Let's See charts.
9. In the panel near the bottom of the screen, select the Cash Flow chart.
10. Tick Detailed to view a detailed breakdown of the chart's inflows.
Payments from the widow's pension will be shown in light blue, beginning in and following the year of mortality.
11. For further details, click any year/bar of the chart that shows this pension income. The chart legend will display.
12. Click Detailed Info.
Payments from the widow's pension will be shown on the Cash Flow and Pensions tabs of the chart details panel.
View payments from a widow's pension in the Incomes vs. Expenditures overview
These payments will also appear on the Overview screen > Incomes vs. Expenditures tab.
You will need to scroll forward to the year of or a year after the simulated mortality event.
View payments from a widow's pension when running a Life Insurance Need analysis
Widow's pensions will also be factored into the results of the Life Insurance Need Analysis simulation. This simulation provides a quick and easy way to see the same results we showed modeled a moment ago, using a drag and drop replacement Mortality event.
Rather than creating a what-if plan to model an earlier than expected mortality, you could instead run a life insurance need analysis to test a plan for potential shortfalls following the death of the primary client or conversely, the client's spouse or partner.
1. The simulation is run from the Let's See charts.
2. Select Simulations at the top of the panel that runs beneath the charts.
3. Select Life Insurance Need and the chart you want to view when running the simulation. The chart can also be changed after the simulation has been completed.
4. Enter the number of years before your client's simulated mortality.
5. For couples you will also be required to enter the number of years before your client's spouse or partner's simulated mortality - i.e. a number must be entered in both the top and bottom fields.
6. Click Analyse.
The simulation will model all of things the software would normally do when someone dies over the course of the plan:
- Benefit payouts are made from active protection policies.
- If the individual is actively employed at time of death and has death in service coverage, a lump sum payout will be made to the beneficiary. Payments from widow's pensions will also start being paid to the survivor.
- Lump sum payouts are made from Money Purchases.
- Survivorship and joint payout options are applied to drawdown pensions, annuities, depending on how you configure them.
- Payments may continue from final salary schemes that are in payment at time of death, depending on how the scheme is configured. Final salaries that are in deferment at time of death may make pension payments, return individual contributions, or pay out a lump sum benefit to the survivor, depending on how the deferred pension is configured.
- The deceased's estate is liquidated and distributed either by default to the the surviving spouse/partner or as specified on the Estate Plans screen.
- Bonds (onshore and offshore life funds) are liquidated and distributed to beneficiaries.
- Property/assets, if co-owned, will pass to the surviving spouse/partner. If the property asset is not co-owned it will be liquidated and the proceeds will pass through the estate distribution.
- Employment and other income earned by the deceased will end unless it is an Other Income source specially tagged "Income Survives Owner".
- Expenses, if owned solely by the deceased, will end at mortality.
- If an expense is co-owned it will continue in the plan at previously set levels. We make no assumptions about which expense should decrease since a plan might contain a mix of expenses, some of which might not be decreased. One's mortgage payment, for example, would not decrease whereas one's living expenses, in general, probably would.
If any shortfalls occur after the simulated mortality, the simulation will calculate how much additional money the survivor would need, as a lump sum payment at time of death, to cover this shortfall. The simulation is intended to determine whether additional life cover might be needed by either person in the plan on behalf of their surviving spouse or partner.
When running the simulation you can click on any bar on or after the simulated Mortality event, which will display in red. Viewing the Chart Details, payments from a widow's pension will be shown on the Cash Flow and Pensions tabs of the chart details panel.