Cash in hand - save 40% on life insurance premiums with a tax loophole
Tax loophole saves 40% on life insurance premiums
Tuesday, 12 Sep 2006 12:13
Britons can save as much as 40 per cent on the cost of their monthly life insurance premiums by exploiting a tax loophole.
Pension term assurance policies mean it is possible to take out a 'pension' life policy - without making pension contributions - and get access to tax relief savings deducted at source, according to Moneynet.co.uk.
"This presents an unmissable opportunity to make savings for many people, whether they already have life insurance running or not," said Moneynet chief executive Richard Brown.
"If you are looking for a new policy now is an excellent time to apply, and for those with existing life cover it may be possible to rearrange cover at a cheaper price under these new rules."
The current situation emerged in the wake of the A-Day pension shake-up (
full story).
Policies which are taken out under the new rules can qualify for tax relief at the policyholder’s highest rate of income tax.
This means 22 per cent is deducted from the premiums paid, with higher rate taxpayers eligible for an extra 18 per cent relief available through their annual tax return.
But there was also a warning for people attempting to exploit this loophole.
"There are some restrictions which apply, particularly for higher earners, so we would recommend that consumers receive advice from an appropriately qualified professional who can search the market, compare prices and advise on suitability," Moneynet's Mr Brown noted.