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Jul 18, 2006
A survey from Investment, Life &
Pensions Moneyfacts magazine has found considerable savings on offer for
consumers looking to take advantage of the new rules governing the pension term
assurance (PTA) market.
PTA is defined as a life assurance
contract set up under a pension arrangement. Subject to pensions legislation,
PTA enjoys the same tax relief that is applied to pension contributions. The
survey examined the PTA premiums and products currently on offer from the
eleven companies currently active in the market and compared these with the
conventional term assurance policies already available. Moneyfacts discovered
that, for some existing term assurance policyholders and for many new
customers, opting for a PTA contract could be highly beneficial.
To validate its point, Moneyfacts
published a matrix showing the ten lowest conventional term assurance premiums
on offer compared with the ten lowest pension term assurance premiums for both
a basic rate and higher rate taxpayer. For a male non-smoker, aged 35 next
birthday requiring cover for £100K over 25 years, the market leading premium
through a conventional term assurance product is £8.64 with ASDA. However, by
opting for a pension term assurance policy, the same customer would pay £8.28
(Legal & General) as a basic rate taxpayer and just £6.37 (Legal &
General) as a higher rate taxpayer.
“Although price is not the only
differentiating factor to be considered when choosing between the two, the cost
savings cannot be ignored and for those clients who have no existing cover in
place at all, the case for PTA is compelling,” says Richard Eagling, Editor of
Investment, Life & Pensions Moneyfacts.
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