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The Best Kept Secret in the Life Insurance Industry (Shhhh!)



Okay! So you’re looking for some life insurance to protect your family in the event of your early departure from this world. You don’t know too much about the different types of policies that are available; and which one will suit you and your pocket.

What is on your agenda at the moment is that you want the best value that money can buy. Before you sign the dotted line on some regular everyday Term Insurance policy, consider the following.

764088_shhhhThere is a life insurance product on the Irish market that is referred to as ‘Pension Term Insurance’ and you don’t have to have a Pension to put it in place. You just need to be eligible to take out a pension and it helps that you are a tax payer; the higher your marginal rate of tax, the more cost effective it becomes.

PERSONAL

If you are i) self-employed, ii) in employment but not a member of a pension scheme iii) or have a PRSA (Personal Retirement Savings Account) – you are eligible to take out a ‘Pension Term Insurance’ policy.

Eg. if your premium for this policy is €500 pa and you pay income tax at 41%, the net cost to you would be €295 pa.*

COMPANY

In addition, if you are an employee (including company director) and your employer will pay at least 1/10th of the cost, you are also eligible for this type of policy. The employer part of the premium is tax-deductible as a business expense. The employee part of the premium would qualify for tax-relief at your highest marginal rate.* NB Maximum levels of cover apply to ‘Company’ Pension Term Insurance.

For something like a 20 year Term Insurance Policy, there are considerable tax savings to be made on this type of policy. You should check your eligibility for Pension Term Insurance and avail of any tax break that may be available to you.

Feel free to ask questions on this product by adding a comment below.

* Subject to same Revenue Maxima on Pension Contributions in respect of % of Earnings and Age.



The Author:

I am a Financial Advisor who is authorised to provide broad based financial advice in relation to PRSA's, Pensions, Life Insurance and other Insured Investment Products in Ireland. Special Focus: Low-Cost 'Execution Only' Financial Products http://www.investandsave.ie

Add Your Comment

  • Anonymous

    Hi thebenefitguy,

    Unfortunately, I have very little knowledge on the Canadian Life Insurance market. The products here in Ireland have tended to take their lead from what is available in the UK. As this is a ‘Pension’ related product, I suppose that it would also depend to the tax treatment of these in Canada.

  • SPC100

    Hi Gerard, That is a great tip, which I was not aware of!

    Can you replace a typical reducing balance “mortgage protection” life assurance policy with a “pension term insurance” policy

  • Gerard Sheehy

    Hi Sean,

    It’s best to consult your mortgage provider and ask them if they are willing to accept a pension term policy. I doubt that they will do it, as the pension term cannot be assigned to them ie. they will not have an interest in the policy.

    That said, they allow folk to do pension mortgages and ‘trust’ them to repay the capital at maturity without taking an assignment on the pension policy.

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    Remember the cheapest plan is the policy that will give you the best benefits that your family really needs in case of emergencies and illnesses.