Tax Deductible Life Cover
Tax Deductible Life Insurance is most commonly and sometimes confusingly known as pension term assurance. In a nutshell, it is tax efficient Life Insurance for workers in non-pensionable employment and for the self-employed including owners of small limited companies. It allows for full tax relief on the premiums at up 40%, if paid personally.
Life Insurance with Tax Relief
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At OneQuote.ie, we are committed to making arranging your Life Insurance, easier and more affordable and compare the market to bring best value, tax efficient life insurance, to the self-employed, small company owner directors and to workers, were your employer does not provide any life cover.
Tax deductible life insurance is a type of Term Life Assurance designed to provide Life Cover to people in non-pensionable employment. This includes for example, a self-employed person, or someone who is not a member of an employer-sponsored pension plan. So if eligible, this valuable option could save you up to 40% on the cost of your Life Cover.
If you are a company director you can also choose to have your company pay the premium. This is called Executive Pension Term Assurance and it allows full corporation tax relief on the premiums.
One month’s free cover
You may qualify for one month’s free Life Cover when you take out this policy through OneQuote.ie. This means that when your application for cover is accepted, you’re insured straight-away and the monthly payments don’t start until one month has passed (only available on policies that are issued on normal acceptance terms).
Tax Deductible – Term Life Insurance
You don’t need to have a private pension plan already in place to take out tax deductible life insurance, but this is something we would recommend considering alongside your life cover.
The major attraction of this form of life insurance is that currently, if eligible, you may claim full tax relief, at your marginal tax rate, on all premiums paid into this policy. So, it can cost you as much as 40% less than a regular Term Life Assurance policy.
For example, Tom owns his own business and currently pays tax on his earnings at the higher rate of income tax (40%). As he is self-employed, he is entitled to tax relief on his monthly Pension Term Assurance premium (currently €100 per month) of €40. Therefore, Tom’s €100 monthly premium actually only costs him €60.
The maximum level of life cover allowed in order to be eligible for tax relief is 4 times your Net Relevant Earnings, (annual earnings less allowable expenses) and it can include optional benefits known as indexation and conversion:
You can choose to select Indexation on your policy which helps protect against the negative effects of inflation. Quite simply, Indexation ensures that your cover increases by 3% each year (in return for a 4% increase in your premiums each year). This helps to protect the real value of your cover as time passes, assuming an annual inflation rate of less than or equal to 3%.
This life cover is also available with a Conversion Option which could be a valuable added benefit, as it allows you to take out a policy without any medical evidence requirement.
You pay a slightly higher premium should you wish to include the Conversion Option with your policy. This option can be used at any time during the policy term up to your 70th birthday. The premium rates current at the time of conversion, appropriate to your age at the time will apply, but no fresh medical information is then sought.
To find out more about this kind of life insurance and its suitability for you, see below, click here to enquire, or call us today on : 01 845 0049.
Tax Deductible Life Insurance – Frequently Asked Questions
Is there a maximum term, or end age on this policy?
Although designed to cover you up to your retirement age, you can take out this life cover right up to age 75. You can also include a continuation option to carry this cover forward without any fresh medical evidence.
How do I claim the relief on the premium?
When you receive your policy documents, they will include a Certificate to send to the Revenue to increase your tax credits, thereby granting your tax relief.
Can I add my partner to this policy?
No, this type of policy can only allow 1 person and that person must be self-employed or in non-pensionable employment. Meaning their employer does not provide life cover for them.
Can I add serious Illness Cover to this policy?
No, this policy is strictly for the purposes of life cover.
Are there any additional complimentary benefits with this plan?
Yes, this policy made available through Royal London automatically includes; Helping Hand, which provides….
Will I have to do a medical?
Dependent on your age and the level of cover, or an existing medical condition, the insurance company may write to your GP for a medical report and in some but few cases, also ask for a medical exam. If such medical information is required, there is no cost to you and you well are informed immediately.