A Guide To Life Insurance - Pure Protection Policies Premiums ....


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Pure Protection Policies Premiums...

Premium rates relate not only to age and health (with great attention being paid to medical history, especially if the policy is substantial) but also to occupation, some high-risk occupations being subject to a heavy extra premium.

The premium is also determined by the period of illness that has to elapse before the benefit becomes payable. This "deferred period" may be 4 weeks, 13 weeks, 26 weeks, and even up to 104 weeks, and the premium is obviously much lower for the longer deferment. "Waiver of premium", so that no premium is payable during a claim period, is normally included.

The variation in exact wording of PHI contracts can be very significant. For example, the exact definition of "mental illness" varies and could prove important to the policyholder.

Likewise, some companies may pay the full agreed annual benefit less whatever a disabled policyholder may earn, while others may pay no benefit if there is no difference in the type of job the policyholder is doing, even if he is earning materially less as a result of his disablement. It is therefore important to be advised on PHI by someone who is familiar with these variations.

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Read On: click here for Life Insurance and Taxation

The sums provided as benefits by pure protection policies are normally free of income tax.
But there are important differences.
For example, the lump-sum benefit provided by a term assurance policy is free of tax.
Of course, as soon as it is invested to earn an income then the income is taxable at whatever rate of income tax the recipient is liable.
On the other hand, the annual benefits paid under FIB policies are instalments of capital rather than income, so they are not........ see: click here for Life Insurance and Taxation


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