The Pensions Versus Savings Debate

The goalposts have been moved over the last few years in terms of the tax efficiency of pensions. Some reliefs have been reduced and  taxes have increased on the benefits that are being drawn down.

Tony Gilhawley of Technical Guidance Ltd., in partnership with Standard Life, have produced a technical paper on the issue titled 'To Pension or to Save...that's the question!', which is available here.

The answer? Well, it depends...

Whichever route you take, it may be worth your while investigating these Pensions or Savings products.

Both sites provide access to low-cost products on an 'execution only' service basis.

How your life insurance premium can increase by 1,384%

I’m currently dealing with a life insurance policy where the Life Company have carried out a ‘review’ of the premium and sum insured. They have decided that the premium needs to be increased by 1,384% if the persons insured want to maintain the level of life cover that’s on the policy, up to the next review date.

The policy was taken out 25 years ago and is what’s referred to as a Unit-Linked whole-of-life policy. The premiums on these policies are guaranteed for 10 years. They are then reviewed by the Life Company and they decide whether the premium, plus any cash value on the policy, is sufficient to maintain the level of cover until the next review date. After the 10 years, reviews are carried out every 5 years thereafter and annually after age 65.

The Life Company state that ..”unfortunately your policy has not been reviewed as scheduled.” My reading is that, they never reviewed it.

Specified Illness Cover - Financial Tip

As most of you will know, Specified (Serious) Illness cover pays out a lump sum if you are diagnosed as suffering from one of a number of specified serious illnesses (ie Cancer, Stroke, Heart Attack etc.), as defined in the product providers policy document.

If a ‘Critical Event’ happens (eg diagnosis of specified illness), then the insured must survive 14 days so that they are eligible to claim under the policy.

If you are in the market to buy this product, for a fixed level term, I would recommend that you buy the cover on a 100% ‘Accelerated’ basis.

This means that you insure yourself for Life Cover & Specified Illness Cover under the one policy, where the full sum insured is paid out in the event of your death or on a ‘critical event’.

The difference in premium between the ‘Accelerated’ & the Specified Illness policy only is very small and in some cases can work out cheaper. You also eliminate the 14 day survival period issue.