A Big Welcome To Pension Life Assurance
Summary
There are various sorts of life insurance quotes cover available in the market. Many people are now benefiting from more economical premiums by moving to pension term assurance (PTA) because of the tax relief available on the cost of this type of policy. However it is not suitable for all people.
It was revealed recently that the cost of life cover has dropped greatly in recent years. What sort of policy is most suitable for you?
Term plans are the simplest and cheapest typeof life insurance – you pay a premium every month for a set value of life insurance for an agreed number of years that the policy will run for. If you die whilst the policy is in force, it then pays out a tax free cash sum. If the plan comes to the end of its term and you have survived, nothing is paid out.
There are several sorts of term insurance: “level” term is where the payout is a fixed amount; “decreasing” term, which is always much cheaper because the cash to be paid out falls year on year. Usually this sort of insurance is taken out to insure a mortgage.
There is also “increasing” term insurance where the amount payable increases slightly during the course of the term ; this can be a good way of protecting your familyagainst inflation.
Joint life plans are very benefitial for couples who need both of their incomes to help pay the mortgage because a payout is made if either partner were to die.
Family Income Benefit (FIB) offers the plan holder’s beneficiaries an annual, quarterly or monthly income from the date of death until the end of the policy term rather than paying out one single lump sum.
The value of cover you need will relate to your own individual personal circumstances. Most medium and large sized firms offer a death in service benefit which can pay out 3 or 4 times to your partner if you were to die whilst still employed. Therefore if you are reasonably confident about staying with that employer, you may reach the conclusion that paying for extra life insuranc with a separate policy is wasteful.
The price of a life insurance policy depends on a few factors, such as the sort of plan, the number of years it should be in force, and certain health criteria – whether you are obese or whether you smoke. Insurance companies are also clamping down on obesity in particular.
There are serious advantages to moving to pension term insurance. If you already have a term policy which pays out a l;arge tax free lump sum, you can make big savings on your monthly premiums by shifting to a pension term policy. This is is because under new pension arrangements, most policyholders qualify for tax relief on the money they pay for life insurance if they opt for a pension term assurance (PTA) policy. This type of insurance is basically the same as term insurance cover 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, no payout is given.
However, some people will not benefit from switching to PTA. For example, if you bought your life insurance policy 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 your health has worsened since you bought your cover, you will probably be better off keeping your existing life insurance cover.
This entry was posted on Wednesday, November 11th, 2009 at 5:57 am and is filed under General. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.