Pension Tax Assurance Has Tax Benefits
Summary
There are various types of life insurance quotes plan available in the market. Many customers are now reaping the benefits of more economical premiums by changing to pension term assurance (PTA) because of the tax benefits on the cost of this type of policy. It is not, however, suitable for all people.
Recently it was revealed that the cost of life insurance policies has reduced dramatically in recent years. So what type of insurance plan is best for people like you?
Term policies are the cheapest and simplest typeof life insurance – you pay a regular premium each month for an agreed value of cheap life insurance for a fixed term that the policy will run for. If you were to pass away whilst the policy was in place, it then pays out a tax free lump sum. If the policy comes to the end of its term and you are still surviving, no benefit is paid out.
There are several sorts of term insurance: “level” term where the payout is a set sum; “decreasing” term, which is always significantly cheaper because the cash to be paid out reduces year on year. In most cases this sort of insurance plan is taken out to insure a mortgage.
“Increasing” term insurance is an option where the cover slightly increases each year during the course of the term ; this can be a good way of protecting your coveragainst inflation.
Joint life policies are useful for couples who use both of their salaries to help meet the mortgage because a payout is made if either partner dies.
Family Income Benefit offers the policyholder’s beneficiaries a regular income from the date of death until the policy comes to the end of its term rather than paying out one single capital paymemt.
The value of cover you need will be dependent upon your own individual circumstances. Most medium and large sized organisations offer a death in service benefit which can usually payout up to 4 times to your partner if you were to die whilst still employed. Hence if you are reasonably confident about remaining with that firm, you may decide that paying for extra life insuranc with another plan is wasteful.
The cost of a life insurance policy depends on a few factors, for example, the sort of plan, the number of years it should be in force, and certain medical questions – whether you are over-weight or whether you smoke. Insurers are also increasing premiums for those who are obese.
There are serious advantages to switching to pension term insurance. If you already have a term insurance cover which pays out a tax free cash sum, you can make big savings on your monthly premiums by changing to a pension term plan. This is is because under new pension arrangements, most people qualify for tax relief on the money they pay for their life insurance plan if they opt for a pension term assurance (PTA) policy. This sort of insurance is basically the same as term insurance in so far as it is still protection-only. So it pays out if you passed away within the insured period but if you live to the end of the insured period, the policy is worthless.
Not everyone stands to benefit from switching to PTA, however. For instance, if you purchased your life insurance quotes a long time ago, the more expensive 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 had a significant illness since you bought your life cover, you will probably be better off staying with your existing life insurance policy.