Life cover - reduce your premiums
Hidden in the small print of the spring 2006 budget, there was some
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Although prior to this revelation it was possible to purchase life cover in relation to a pension, the amount was restricted to 10 per cent of pension contributions. From April 6 th the sky's the limit and it'll all qualify for tax relief, even if bought as a stand-alone policy.
The product which offers all this is called PTA, which stands for pension ( cheap car insurance ) term assurance and it's possible to save up to one third of your costs of life cover by using this. The mechanics of this simple product are uncomplicated. It's a basic life insurance, with no frills or add-ons.
Insurers are now offering this product, packaging life cover by way of a pension plan. For people paying tax at the basic rate, for every £78 they put into the plan, their insurance company will collect their basic rate tax relief and make the amount credited up to £100. Should ( car insurance ) you fall into the higher rate tax bracket of 40%, you are eligible to claim a further £18 via your self-assessment form. £100 worth of cover for just £60! There are some costs involved in the insurance company administrating this service but for most people the tax breaks make it worth their while.
For a woman who is a non-smoker who takes £150,000 of life cover over a period of 25 years, there are worth-while savings. "Ordinary" level term assurance with one of the larger insurance firms would cost £16.80 per month. With a PTA, if she pays tax at standard rate, she ( best mortgages ) would only pay just over £14.33. Over the term of the policy this would be a saving of £741. A higher rate taxpayer would save £1,734 if the same conditions applied.
Are there any snags? Not for most people. You have to accept the basic, uncomplicated cover of the policy. If you're in the higher tax bracket and there's a change ( medical insurance ) in your tax position where you become a standard rate taxpayer, this means PTA is less worthwhile, but conversely if you move up from standard to higher rate, then you're not going to grumble.