Summary
There are various sorts of life insurance quotes policy available in the market. Many clients are now experiencing the benefits of cheaper premiums by changing to pension term assurance (PTA) because of the tax relief on the cost of this type of insurance policy. However it is not suitable for everyone.
It was revealed recently that the cost of life insurance policies has fallen greatly in recent years. So what type of insurance plan is most suitable for people like you?
Term policies are the simplest typeof life insurance – you pay a premium regularly each month for a set value of cheap life insurance for an agreed 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 insurance policy comes to the end of its term and you have survived, no benefit is paid out.
There are several sorts of term insurance: “level” term where the payout is a fixed amount; “decreasing” term, which is often quite a lot cheaper because the sum to be paid out drops every year. Usually this type of insurance plan is taken out to protect a mortgage.
Another option is “increasing” term insurance where the insurance cover increases slightly during the course of the term ; this can be a good way of protecting your financesagainst inflation.
Joint life insurance policies are very useful for couples who use both of their salaries to help pay the mortgage because a payout is made if either policyholder were to die.
Family Income Benefit offers the policyholder’s beneficiaries a monthly income from from the date the policyholder dies until the policy ends rather than paying out one single capital paymemt.
The amount of insurance cover you need will depend on your own individual circumstances. Most large and medium-sized companies offer a death in service benefit which can pay out 3 or 4 times to your partner if you died whilst still in employment. Hence if you are reasonably confident about staying with that employer, you may conclude that paying for additional life cover with another plan was superfluous.
The cost of a life insurance policy depends on a number of factors, for example, the length of the policy’s term, the type of policy and certain medical criteria, and certain medical questions – whether you are over-weight or whether you smoke. Insurers are also pushing up premiums for those policy holders who are over-weight.
There are major advantages to moving to pension term insurance. If you already have a term policy which pays out a tax free cash sum, you can reduce the cost of your premiums by shifting to a pension term policy. This is is because under new pension arrangements, 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 sort of insurance is basically the same as standard term insurance in so far as it is still protection-only. So it pays out if you die 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 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 took out your plan, you will probably be better off staying with your existing life insurance policy.
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