Summary

Under new tax rules, if you're taking out a pension you have the opportunity to add in life insurance cover at a knockdown price. This article explains.

Life Insurance. Bargain Life Insurance when you take out a pension policy

Author: Michael Challiner

At last, a real life insurance bargain - but as always

The combined premium you pay for your pension and life insurance will automatically be reduced by 22% by the pension provider. But if you're a higher rate taxpayer, you'll need to claim the balance to bring your relief up to 40%, on your year-end self-assessment tax return.

But there are three strings attached:

•  The pension company must also provide your life insurance and be paid as one combined premium.

•  The current value of your pension fund plus the sum insured by your life insurance policy must not exceed £1.5 million.

•  Your combined annual premium for your pension and life insurance must not exceed £215,000.

In practice the savings on your life insurance will not be quite as big as you might otherwise expect. Its because the underlying premium for the life insurance cover will be a bit more expensive than a stand-a-lone policy with the same company and, in all probability, the insurance company providing your pension policy won't be the cheapest on the life insurance market. Furthermore, you can't buy a combined pension and life insurance policy online - so you'll miss out on the Internet's discounted life insurance prices.

Nevertheless, if you're a higher rate taxpayer, your tax savings are bound to guarantee that your life cover is a real bargain! If you're a standard rate taxpayer you'd be wise to do a little homework. Before you buy, you should get an online quote for life insurance to compare against the price you'd pay if you bought it alongside your new pension.

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Did you Know?
Personal secured loans are widely advertised on the Internet but research has found that of those applicants who are accepted, 43% are offered a rate that is higher than the advertised rate (source: Experian, the UK's largest credit reference agency). Therefore, if you're looking for a cheap secured loan, it's probably best to apply through a loan Broker. The Broker will know exactly which lenders will accept your credit history and find you the cheapest possible loan.

Today's Tip
If you want cheap motor insurance quotes then ensure you get some quotations from car insurance brokers. The brokers will compare the premiums from the various UK insurance companies and find you the best deals. And as in many things in life, remember that the cheapest is not necessarily the best – always check out the details of the insurance cover – for example, whether legal assistance or windscreen cover is included and whether a courtesy car is provided if your car is being repaired. Also check out the excesses on the policies you are being offered.

Did you Know?
Cheap secured loans are widely advertised on the Internet but of those applicants who are accepted, 43% are offered a higher rate than the rate they saw advertised (source: Experian). That's why, if you're looking for a cheap secured loan, it's a good idea to apply through a loan Broker. The Broker will know exactly who will accept your credit history and find you the cheapest rates of interest.