How Much Will I Save?
The benefit of Pension Term Assurance is that premiums receive up to 40% tax relief.
Depending on whether you are a standard rate tax payer, pay not tax at all, or pay the highest rate of tax, the Government gives you tax relief on your life insurance premiums.
Basic Rate & Non-Tax Payers
For non-tax payers and those who pay the basic rate, the Government will pay 22% of your premiums. As pension term assurance tends to take a little more administration than a standard life insurance policy, and as the market is not quite as competitive, the premiums would be slightly higher, all other things being equal, but because of the tax relief they earn, pension term policies should work out between 5% and 15% cheaper than a comparable life insurance policy.
High Rate Tax Payers
For higher rate tax payers (paying 40% tax) the savings should be around 30%. 22% tax relief will be given at source (reduces the monthly premium you pay), and the 18% tax remaining can be claimed back in your self-assesment tax return.