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.
There 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.
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.*
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.