Life Assurance as Investment - Example

Example ii. A man of 69 pays £10 a month for a fifteen-year term equity-linked policy.

Premiums: Assuming that he pays tax at 6o %, he claims tax relief on his premium, so that his net monthly cost is only £8.50, i.e. he pays 32 x 8.9o = £150 p.a. Total net premiums over fifteen-year term = 30 X 302'00 = £6,960.

2. On death: The amount payable depends on the level of share prices on the day of death. Many schemes have a guaranteed minimum - a typical minimum could be k ,800.

3. After fifteen years at maturity: Some schemes guarantee a minimum sum - this, again, could be £6,800, but most pay out only the value of the units. No one knows in advance what this will be, as the amount depends on the level of share prices on the particular day your policy matures.

For illustration purposes only, a yearly growth rate of 50 % would result in a maturity value of about £4,900, allowing for expense deductions; commissions, and deductions for tax.

4. Surrender: You would be given the units or their value. This may often be less than the amount you have paid in. If you surrender during the first ten years, you may find that you have to pay tax.

Property bonds

Most of the comments on equity-linked policies apply to property bonds, which instead of being linked to an equity fund are linked to investments in property. Another 'difference between them is that property bonds are usually single-premium policies (i.e. premiums are payable at the outset in one cash lump sum), whereas equity-linked policies can be bought with either regular (e.g. annual/monthly) or single premiums. Remember that the single-premium policies do not qualify for tax relief and that the proceeds are subject to tax by those liable to tax at rates higher than the basic rate. The life assurance element is minimal and is included for legal reasons to allow the bonds to be sold directly to the public. As the law stands at present, salesmen cannot actively sell the bonds, but as soon as life, assurance is added, then this is allowed. As with equity-linked, policies, the part of your premium remaining after deduction for life assurance and expenses is invested in units of the fund. The fund is valued regularly, and in most cases you can follow its progress in the financial pages of the daily press.


Life Assurance as Investment -

Payroll Giving
It’s all very easy to organise.
Just ask the Personnel or the Payroll Department at your company and, if they already have a scheme, they will give you the relevant forms.  HM Revenue & Customs’ website has a list of Payroll Giving agencies and explains payroll giving in more detail.

Salon Gold Insurance

Cheaper Insurance for Salons, Freelance Hair and Beauty, and Mobile Businesses - click here

read on: Life Assurance as Investment - Advantages

Example ii. A man of 69 pays £10 a month for a fifteen-year term equity-linked policy.

Premiums: Assuming that he pays tax at 6o %, he claims tax relief on his premium, so that his net monthly cost is only £8.50, i.e. he pays 32 x 8.9o = £150 p.a. Total net premiums over fifteen-year term = 30 X 302'00 = £6,960.

2. On death: The amount payable depends on the level of share prices on the day of death. Many schemes have a guaranteed minimum - a typical minimum could be k ,800.

3. After fifteen years at maturity: Some schemes guarantee a minimum sum - this, again,... see: Life Assurance as Investment - Advantages