Millions of Brits are ignoring the free cash on offer from pension term assurance
9 in 10 miss free govt cash for life insurance
Monday, 13 Feb 2006 15:54
More than nine people in ten are missing out on the free government cash on offer for life insurance policies.
Just nine per cent of Britons have taken out a pension term assurance policy - letting consumers benefit from tax relief on their life insurance premiums - figures from moneysupermarket.com show.
And only one in five (21 per cent) of those with life cover would consider switching to this form of insurance.
Pension term assurance is available regardless of whether you have a pension or not, it offers basic-rate taxpayers up to 22 per cent tax relief on their premiums with higher-rate taxpayers able to claim another 18 per cent back through their tax returns.
The money paid as premiums does count towards your pension contribution.
"We believe that if providers and advisers explained this new product more clearly to customers, far more would consider switching to pension term assurance to save money on their life insurance," said Emma Walker, protection manager at Moneysupermarket.
"It's important to point out that the product features of pensions term assurance won’t suit everyone by any means, but for millions of taxpayers it could add up to hundreds of pounds of free money from the government in terms of tax relief over the term of their policy."
However, 17 million adult Britons are "certain" they would not consider pension term assurance although ignorance is behind this decision in many cases.
One person in eight of those that would not consider it think they need a pension to take out pension term assurance, almost one in four (23 per cent) of those with traditional life insurance who would not consider switching say they know nothing about pension term assurance.
"Despite pension term assurance coming into force seven months ago, there is still a huge number of people who know nothing about it, and many are under the impression they need a pension in order to qualify," Ms Walker said.
"The name alone is clearly putting some people off applying."