What is life cover with tax relief?
It is life cover that has been approved for tax relief under Section 785 of the Taxes Consolidation Act, 1997. Effectively life cover that qualifies for tax relief. It is also known as Pension Term Insurance.
There are 2 types of Pension Term Insurance
Personal pension term insurance and executive pension term insurance.
Who is Personal Pension Term Insurance suitable for
- Any one who is self employed, either profession or trade such as solicitors, accountants,
carpenters or farmers, assessable for income taxunder Schedule D Case I and II.
- Anyone who is in non-pensionable employment i.e. PAYE workers who are not part of a company
(occupational) pension scheme.
Who is Executive Pension Term Insurance suitable for
- If you are a director of a company or are an employer.
- If you are a member of a group occupational pension scheme and your employer has set up
a group AVC scheme.
How does tax relief work
Premiums paid into Executive Pension Term Assurance are eligible for tax relief at the appropriate corporate rate, subject to certain limits. There are no BIK implications for the individual director or employer.
Premiums paid into Personal pension term insurance qualify for tax relief at the life insured’s marginal rate of income tax, subject to certain limits.
Policy proceeds paid out free from tax income of corporation tax (Inheritance Tax may apply if beneficiary is not a spouse or registered civil partner and the lump sum paid out exceeds certain group threshold).