Tax Relief available on around 50% of new life insurance policies.
As from Budget day in Spring 2006 life insurance premiums can attract tax relief. However, tax relief only applies to a particular new type of life insurance policy.
Standard taxpayers can now save around 15% and if youre a higher rate taxpayer you can save a hefty 30% off your premiums. And it now looks as if up to 50% of all new policyholders can make these tax savings!
These new life policies are sold under a number of names ranging from plain Pensions Life Insurance to Level Term Pensions Life Insurance. But dont be life assurance worried by the word "pension" - these policies can be bought totally separately to any pensions you have. In fact you dont even have to have a pension! The word "pension" is there because the regulations which introduced the tax loophole is part of a wider ranging legislation which relates primarily to Inheritance tax and pensions.
You should be aware that a Pensions Life Insurance policy will not suit everybody and not everyone will qualify for these tax savings. Thats why you must take advice from Moneyquests Adviser when he or she phones you. (car insurance quotes)
So how does Pensions Life Insurance work? In common with all Life Insurance it pays out a lump sum if the policyholder dies or is diagnosed with a terminal ( life assurance ) illness which will result in death within twelve months. Of course this only applies if the policy is in force at the date of death.
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- Life Insurance and the Law. A layman's introduction.
- This article is an introduction to the regulatory and legal aspects of buying Life Insurance which the layman should find interesting and useful. Special reference is made to buying life insurance on the Internet.
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But theres only one type of Pensions Life policy available: these policies can only insure one person, joint policies are not available. However, you can take out a policy for yourself and a separate policy for your partner. You cant add critical illness cover into the policy either. (cheap health insurance)
The other important point is that they are only available as ( mortgage quotes ) level term policies. That means that the sum insured remains constant throughout the entire period the policy is in force. If you want a policy where the insured sum decreases steadily down to zero by the end of the policy, then a Pensions Life Insurance policy is not for you.
That means that these policies will not be the cheapest way to protect a repayment mortgage where Decreasing Term form of Life Insurance, sometimes called Mortgage Life Insurance, is usually bought. That is unless youre happy to buy a Pensions Life policy and get more life cover than you really need to repay the mortgage. Then, if there is a payout, your mortgage would be repaid and the surplus could go to your family. But, if you just want the cheapest way to protect a repayment mortgage, then a low cost Mortgage Life Insurance policy will probably be the best solution - but you wont get tax relief on your premiums!
Now you may wonder why the savings on the premiums are less than the value of your tax relief. Its because Pensions Life policies are about 15% more expensive than a conventional life policy. The insurance companies charge a bit more for them because they have extra work to do to reclaim the standard rate tax relief from the Inland Revenue. (pet insurance)
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