Summary
There are various categories of life insurance quotes policy available in the market. Many clients are now reaping the benefits of cheaper monthly premiums by switching to pension term assurance (PTA) because of the tax relief on the cost of this type of policy. However it is not suitable for all clients.
Recently it was revealed that the cost of life insurance has fallen greatly in recent years. So what type of insurance plan is most suitable for you?
Term cover is the simplest and cheapest typeof life insurance – you pay a premium every month for a set amount of life insurance for set number of years that the policy will run for. If you die, it then pays out a cash sum. If the plan terminates and you are still alive, no benefit is paid out.
There are several sorts of term insurance: “level” term is where the payout is a set amount; “decreasing” term, which is often slightly cheaper because the benefit to be paid out falls each year. With most customers this type of policy is taken out to insure a mortgage.
“Increasing” term insurance is an option where the cover rises a bit each year during the course of the term; this can be a good way of protecting your familyagainst inflation.
Joint life insurance plans are very useful for couples who use both of their salaries to pay the mortgage because a payout is made if either partner were to die.
Family Income Benefit offers the plan holder’s beneficiaries a monthly income from from the date the policyholder dies until the policy terminates rather than paying out one single lump sum.
The amount of insurance cover you need will relate to your own individual personal circumstances. Most large and medium-sized companies offer a death in service benefit which can sometimes pay as much as 4 times your annual income to your partner if you were to die whilst still employed. Hence if you are reasonably confident about staying with that employer, you may reach the conclusion that paying for additional life cover with another arrangement was superfluous.
The price of a life insurance policy depends on a number of factors, such as the sort of plan, the number of years it should be in force, and certain health questions – whether you are fat or whether you smoke. Underwriter are also especially clamping down on obesity.
There are significant advantages to switching to pension term assurance. If you already have a term insurance cover which pays out a tax free lump sum, you can save a considerable amount on your monthly premiums by changing to a pension term plan. This is is because under new pension arrangements, most customers qualify for tax relief on the money they pay for life insurance if they opt for a pension term assurance (PTA) policy. PTA is basically the same as the usual term insurance in so far as it is still protection-only. So it pays out if you passed away within the period the insurance was in force but if you live to the end of the insured period, the policy has no value.
Not everyone stands to gain from moving to PTA, however. For example, if you purchased your life insurance quotes a long time ago, the more expensive 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 had a significant illness since you purchased your policy, you will probably be better off staying with your existing policy.
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