The spring 2006 budget brought good news as tax relief on some life insurance policies became possible. We discuss who can benefit and how in this article.
Tax relief for some life insurance policies
Author: Anna Richardson
The long-awaited has now finally happened - tax relief is available for life ( life insurance quotes ) insurance.
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These new policies will represent a decent saving - of between 5% and 15% for average rate taxpayers and around 30% to taxpayers who pay the higher rate.
There are a number of restrictions however. You can't add critical illness insurance onto your life policy, you must fix the insured sum, and the policy must be for a single life only - joint policies will not benefit. So in short, it needs to be a single life, level term, pretty standard issue policy.
There are a few more few restrictions but we seriously doubt they will apply to many - except perhaps the rich and famous! For example, you will not be eligible if:
• you pay more than £215,000 of combined life insurance premiums and ( life insurance quotes ) pension payments in one year; and
• if the combined value of your pension and life insurance payout is over £1,500,000, then a tax charge of 55% will apply to the excess. This is a stipulation that does not apply to conventional life insurance policies.
If you are a standard rate taxpayer, you will pay a lower premium which ( life insurance quotations ) already takes into account the tax relief calculation. It is all done automatically by the life insurance company.