A Guide To Life Insurance - An Online Guide To Life Insurance - Taxation .... ....


Find Out More


An Online Guide To Life Insurance - 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 liable to income tax at all.

In the case of benefits payable under an individual permanent health insurance policy, the normal practice is that no tax is payable until the benefit has been paid for a full "fiscal year".

The fiscal year runs from 6 April to 5 April, so the effect of this rule is that benefit may be payable for up to 23 months before any income tax is due.

(If benefit starts in May 2007, the 11 months up to the following 5 April 2018 do not constitute a full fiscal year.

Only after a further 12 months has passed will tax be assessable, i.e. in the 2009/80 tax year.)

2015 - Guide To Life Insurance - New sections added ....

Other readers found these pages interesting


Read On: click here for Till Death Us Do Part

This concession on permanent health benefits applies only to the individual taking out a policy himself; and it is counterbalanced by the fact that when tax does become payable, the benefit is taxed as investment income, so that it is subject not only to basic rate income tax (and higher rates where these apply) but also to the investment income surcharge.
For the fiscal year 2015 /79, the surcharge was levied at 10% on the band of income between £211,700 and £22,250 and at........ see: click here for Till Death Us Do Part


Our insurance website is an independent marketing website which acts as an introducer to 'whole of market' companies who offer specialist Independent Financial Advice. Each company is authorised and regulated by the Financial Services Authority.


We are not authorised to give advice and we are not liable for any financial advice provided by, or obtained through a third party. The information published on this website is for information purposes only. This site has been approved for compliance purposes by a Firm of Independent Financial Advisors who are authorised and regulated by the Financial Services Authority (FSA). The Chartered Insurance Institute

Giving power to the reader...

  • To contact us, send an email and we will get back to you as soon as we are able. If you are looking for independent life insurance quotations then click here. If you are looking for any of the folliowing: Car insurance
    Bike insurance, Travel insurance, Home insurance, Life insurance, Landlord insurance, Pet insurance, Medical insurance, Dental insurance, Business insurance please click here

  • Have something to say?
    We publish financial articles on this site if they fulfil our requirments. more>>