In general, it is not possible to get tax relief on any premiums paid in respect of a life assurance policy that is designed to pay out a lump sum to your Estate should you die while the policy is in force.
However, it is possible to set up a Pension Term Assurance which is a regular premium protection plan designed to provide guaranteed life cover up to a specified retirement age.
Pension Term Assurance is available to the self-employed and to those in non-pensionable employment.
Premiums paid into Pension Term Assurance are eligible for tax relief at the policyholder’s marginal tax rate, subject to certain limits.
Any death benefit paid out is not subject to tax.
There are some restrictions.
- A policy must be set up on a single life basis only and joint life policies will not qualify for the tax relief.
- The policy cannot be used as security against a loan and cannot be used as a mortgage protection policy.
Like all other term assurance policies the Life Cover can be level or increasing, convertible or non-convertible, and with or without a Guaranteed Increase option.
A conversion option allows you, at any stage up to your 65th birthday, to continue your cover beyond the contract expiry date without having to provide further medical evidence.
Under this option, you can take out a new Pension Term contract. The premium will be revised accordingly at the time.
Some Insurers will allow you to convert to a Convertible Pension Term policy.
Because you can convert to another Convertible contract this option uniquely provides you with rolling convertibility.
If you become ineligible for cover under the contract because you have changed your employment status you are generally given an option that you can automatically continue cover under a Term Assurance contract for the remainder of the term originally selected without having to provide further medical evidence.