New Government ruling will see life insurance increase for all
Just as life insurance was reaching its cheapest point ever, it was inevitable that something would come along and put the costs up. This year’s budget has improved unpopular with many for a number of reasons including the so called Granny Tax raid on pensions, and the reduction in higher rate taxpayers tax rate.
One thing hardly mentioned were changes in the way in which companies offering life insurance could go about their business. The changes will see an end to the loophole where life insurance companies could offset the cost of offering their life insurance services against the money they were making on investments, essentially paying far less tax than they should.
The loophole was so effective that critical illness insurance companies could offer a critical illness insurance policy, with £100,000 worth of life insurance for free for less than they could offer the exact same critical illness insurance policy without the life insurance added on, because they could take advantage of the loophole.
The difference in cost is difficult to calculate, but some experts believe it may add as much as 25-30% to the cost of policies, making it vitally important to buy your life insurance between now and 6th April 2013, when the changes are set to take place.
With life insurance companies almost certain to pass on the cost of the changes to their customers it could be a grim time for life insurance, which has reduced in cost almost every single year for the last ten years, thanks to an increase in life expectancy and an improvement in the state of the nation’s health, and the healthcare facilities on offer.
Those contemplating taking out life insurance in the next few years would be wise to move now, as would those who are planning on having children in the next few years, and think they would have to increase their level of cover to allow for their children.