A Big Welcome To Pension Life Assurance
Summary
There are various sorts of life insurance cover policy available in the market. Many people are now reaping the benefits of cheaper premiums by changing to pension term assurance (PTA) because of the tax benefits available on the cost of this type of insurance policy. It is not, however, suitable for all customers.
It was revealed recently that the cost of life insurance plans has fallen big style in recent years. What sort of policy is best for people like you?
Term plans are the simplest typeof life insurance – you pay a monthly premium for a set amount of life insurance for set number of years that the policy will be in force for. If you were to die during the plans’ term, it then pays out a tax free cash sum. If the policy terminates and you are still alive, nothing is paid out.
There are several sorts of term insurance: “level” term is where the payout is a set sum; “decreasing” term, which is often much cheaper because the cash to be paid out decreases each year. In most cases this type of plan is taken out to protect a mortgage.
Another option is “increasing” term insurance where the insured sum slightly increases each year during the course of the term ; this can be an excellent way of protecting your coveragainst inflation.
Joint life insurance plans are very 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 plan holder’s beneficiaries a monthly, quarterly or annual income from from the date the policyholder dies until the policy terminates rather than paying out one large lump sum.
The value of insurance you need will be dependent upon your own individual personal circumstances. Most medium and large sized companies offer a death in service benefit which usually pays out three or four times to your partner if you died whilst still in employment. Therefore if you are reasonably confident about staying with that employer, you may reach the conclusion that paying for more life insurance with another arrangement is superfluous.
The price of a life insurance plan depends on a number of factors, namely the sort of plan, the number of years it should be in force, and certain health questions – whether you are obese or whether you smoke. Insurance underwriters are also especially clamping down on obesity.
There are big advantages to moving to pension term insurance. If you already have a term insurance plan which pays out a tax free cash sum, you can reduce the cost of your monthly premiums by shifting to a pension term policy. The reason for this is because under new pension regulations, most plan holders qualify for tax relief on the money they pay for their life insurance plan if they opt for a pension term assurance (PTA) policy. PTA is basically the same as standard term insurance cover in so far as it is still protection-only. So it pays out if you passed away within the term but if you survive to the end of the policy, no payout is given.
Not everyone stands to gain from moving to PTA, however. For instance, if you bought your life insurance a long time ago, the higher premiums that you may now have to pay because you will then be oldercould well outweigh the benefit of tax relief. Similarly, if you have been seriously ill since you bought your life cover, you will probably be better off keeping your existing life insurance cover.
Category: Contributors
