Life Cover – A Self-employed Tax Break
th Nov 2016 |
The first thing I hear from a self-employed person whenever I tell them I am a financial adviser is not, oh God! are you going to try sell me something, but “can you reduce my tax bill?”
Thankfully, the answer is yes, or I would not be too successful!
Most self-employed operators and directors of small companies, already know that a pension plan will reduce their tax bill, but very few if any, are aware of Pension Term Assurance, a life insurance policy that provides full personal tax relief on the cost.
You don’t even have to have a pension plan to take this out (although that would be a good idea) once you’re self-employed you’re in!
Let’s look, at how it works:
A 39-year old self-employed person, non-smoker, on a salary of €65,000 wants life insurance. They shop around and get the cheapest market policy giving them: €260,000 life cover for 35 years, it costing: €44.18 pm.
The policy is a standard term policy, a with continuation option, so once they are nearing 75, they can still maintain (continue) their life insurance, but a at perhaps a lower level, as financial commitments have reduced. Makes sense, right?
Yes, it does! All except NO TAX RELIEF!
If the exact same cover was taken out, but this time using the self-employed version, pension term assurance, now look:
Monthly Cost: €44.86 pm
Tax Relief: €17.94 pm
Over Policy Term – Money back in your pocket: €7,534.80!
- Quotes are based on best Irish market rates in November 2016.
- Quotes assume standard medical acceptance.
Now you tell me, reckon it’s a no brainer?
Yes – So, why not get your quote
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