Summary
There are various sorts of life insurance cover  policy available in the market. Many customers are now experiencing the benefits of more economical premiums by moving to pension term assurance (PTA) because of the tax relief available on the cost of this type of insurance policy. It is not, however, suitable for all customers.

It was revealed recently that the cost of life cover has dropped dramatically in recent years. What sort of policy is best for people like you?

Term policies are the simplest typeof life insurance plan – you pay a regular premium each month for an agreed amount of life insurance for set number of years that the policy will run for. If you were to die during the plans’ term, it then pays out a cash sum.  If the insurance plan comes to the end of its term and you are still alive, no money is paid out.

There are several categories of term insurance: “level” term where the payout is a set amount; “decreasing” term, which is always significantly cheaper because the benefit to be paid out reduces each year. With most customers this type of insurance policy is taken out to insure a mortgage.

“Increasing” term insurance is an option where the insurance cover slightly increases each year during the course of the term ; this can be an excellent way of protecting your coveragainst inflation.

Joint life insurance policies are useful for couples who require both of their salaries to help meet the mortgage because a payout is made if either policyholder dies.

Family Income Benefit offers the client’s beneficiaries a monthly, quarterly or annual income from the date of death until the end of the policy term rather than paying out one cash lump sum.

The value of cover you need will depend on your own individual personal circumstances. Most large and medium-sized businesses offer a death in service benefit which can usually payout up to 4 times to your partner if you die whilst being employed. Therefore if you are reasonably confident about staying in employment, you may decide that paying for more life insurance with another arrangement was unnecessary.

The cost of life insurance depends on numerous factors, namely the length of the policy’s term, the type of policy and certain medical criteria, and certain medical questions – whether you are over-weight or whether you smoke. Insurers are also increasing premiums for those who are obese.

There are significant advantages to moving to pension term insurance. If you already have a term insurance plan which pays out a tax free cash sum, you can save a considerable amount on  your monthly premiums by changing to a pension term policy. The reason is because under new pension arrangements, most customers qualify for tax relief on the money they pay for life cover if they opt for a pension term assurance (PTA) policy. This type of insurance is basically the same as term insurance in so far as it is still protection-only. So it pays out if you die within the period the insurance was in force but if you survive to the end of the policy, no payout is given.

However, some people will not benefit from switching to PTA. For instance, if you bought your life assurance a long time ago, the larger 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 been seriously ill since you took out your life cover, you will probably be better off staying with your existing policy.

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