Pension Life Assurance And Tax Breaks

Summary
There are various types of  life insurance quotes  cover available in the market. Many clients are now seeing the benefits of lower premiums by moving to pension term assurance (PTA) because of the tax relief available on the cost of this type of insurnace plan. However it is not suitable for all people.

Recently it was revealed that the cost of life cover has reduced dramatically in recent years. What sort of policy is best for people like you?

Term policies are the cheapest and simplest typeof life insurance plan – you pay a monthly premium for an agreed amount of life insurance for a fixed term that the policy will run for. If you die whilst the policy is in force, it then pays out a lump sum.  If the policy terminates and you are still alive, nothing is paid out.

There are several types of term insurance: “level” term is where the payout is a set amount; “decreasing” term, which is usually slightly cheaper because the benefit to be paid out drops every year. Normally this type of plan is taken out to protect a mortgage.

Another option is “increasing” term insurance where the insurance cover goes up each year; this can be a good way of protecting your coveragainst inflation.

Joint life insurance policies are benefitial for couples who need both of their salaries to help pay the mortgage because a payout is made if either policyholder dies.

Family Income Benefit offers the policyholder’s beneficiaries a monthly income from from the date the policyholder dies until the policy terminates rather than paying out one single capital paymemt.

How much cover you need will depend on your own individual circumstances. Most large and medium-sized firms offer a death in service benefit which can often payout as much as four times to your partner if you die whilst being employed. Hence if you are reasonably confident about staying in employment, you may conclude that paying for additional life cover with a separate policy is not required.

The cost of a life insurance plan depends on numerous factors, such as the type of policy, the length of its term, and certain health criteria, and certain health issues – whether you are obese or whether you smoke. Insurance companies are also especially clamping down on obesity.

There are serious advantages to switching to pension term insurance. If you already have a term insurance policy which pays out a tax free lump sum, you can save a considerable amount on  your premiums by shifting to a pension term cover. The reason is because under new pension regulations, most people qualify for tax relief on the money they pay for their life insurance if they opt for a pension term assurance (PTA) policy. This type of insurance is basically the same as the usual term insurance cover in so far as it is still protection-only. So it pays out if you passed away within the period the insurance was in force but if you survive to the end of the policy, the policy is worthless.

Not everyone stands to gain from moving to PTA, however. For instance, if you purchased your life insurance plan a long time ago, the higher premiums that you may now have to pay owing to the increase in your agecould well outweigh the benefit of tax relief. Similarly, if you have been seriously ill since you purchased your cover, you will probably be better off staying with your existing policy.

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