Life Insurance Available With Tax Relief.
Below is a MRR and PLR article in category Finance -> subcategory Insurance.
Life Insurance with Tax Benefits
Summary:
Recently, it has become possible to purchase life insurance with tax benefits, thanks to changes in Gordon Brown's latest Budget speech. However, this relief is available only for a new type of life insurance policy and not applicable to existing ones. These new policies take advantage of a loophole in the Finance Bill, promising savings of 5% to 15% for standard taxpayers and about 30% for higher taxpayers.Key Points:
Eligibility and Limits:
These new life insurance policies offer a unique tax advantage, but you need to meet specific criteria. Extras such as critical illness cover cannot be included, and the insured sum must remain fixed. Also, joint policies are not permitted?"only standard, level-term, single-beneficiary life insurance policies qualify.Financial Restrictions:
The policies also come with financial caps. If your annual contributions to your pension and life insurance premiums combined exceed £215,000, you won't be eligible. Similarly, if your pension fund's value plus the life insurance payout surpasses £1,500,000, any excess will incur a 55% tax. This doesn’t affect conventional life insurance policies.Tax Relief Mechanism:
The tax relief is conveniently managed by the life insurance company itself, which reduces your premium by the standard tax rate. Higher-rate taxpayers will need to claim additional relief through their self-assessment tax return, after which tax relief should continue automatically through their tax code.Costs and Considerations:
While these policies seem beneficial, the savings might be slightly less than the tax relief value due to administrative costs imposed by Inland Revenue. This makes the base cost of these policies a bit higher than conventional insurance; however, after tax relief, they offer savings.Future Implications:
Though the Chancellor could eventually eliminate this tax relief, such changes are rarely applied retrospectively, ensuring some level of protection. However, changes in your income and subsequent tax bracket could affect your savings.Availability:
This new life insurance option is now offered by many major UK insurers and specialist brokers. Note, these policies aren't available with online quotes?"you'll need to speak directly with a Life Insurance Adviser.Various Names for the Same Policy:
These policies might be listed under different names such as Pension Term Insurance, Life Insurance with Tax Relief, or Life Protection with Tax Relief?"but they all refer to the same option.And to clarify a common misconception: You don’t need to purchase a pension alongside the life insurance policy.
You can find the original non-AI version of this article here: Life Insurance Available With Tax Relief..
You can browse and read all the articles for free. If you want to use them and get PLR and MRR rights, you need to buy the pack. Learn more about this pack of over 100 000 MRR and PLR articles.