Pension Term Assurance -Tax Deductible Life Cover
Get tax relief at your marginal rate and protect your family’s lifestyle
Why Pension Term Assurance?
Pension Term Assurance is a tax-deductible form of life insurance. We all know taking out Life Cover is a good idea, but sometimes with all the other demands on your income, it can be hard to see how to budget for it.
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If you’re self-employed, you may not always have a regular income to rely on, which can make it tough to budget for Life Cover on top of things like mortgage and car repayments, groceries, and more. Our Pension Term Assurance policy can help deliver the peace of mind that comes from knowing that these expenses can be covered should you die. In fact, it can cost up to 40% less than a regular Term Assurance policy.
How does Pension Term Assurance work?
Quite simply, this is a Term Assurance policy that is structured to use the tax relief that is currently available under pensions legislation, and you don’t even need to have a pension plan to benefit from it!
Pension Term Assurance is designed to provide Life Cover to those in non-pensionable employment. This includes self-employed people or people who are not members of an employer-sponsored pension plan.
Eligible policyholders pay their full premium and then claim tax relief at their marginal rate from Revenue. Based on current tax rates, this means that for a higher-rate taxpayer, a saving of 40% of the premium may be available.
Pension Term Assurance – Take a Closer Look
A major attraction of a Pension Term Assurance policy is that currently, if eligible, you may claim full tax relief at your marginal tax rate on all premiums, within certain limits (see table) paid into this policy. So, if eligible, this valuable security may cost you as much as 40% less than a regular Term Assurance policy.
Tax Relief on Pension Term Cover
For example, Tom owns his own business and currently pays tax on his earnings at a higher rate of income tax (40%). As he is self‑employed, he is entitled to tax relief on his monthly Pension Term Assurance premium (currently €100 per month) of €40. Therefore, Tom’s €100 monthly premium actually only costs him €60.
(Tax relief is currently available at your marginal rate of tax. 40% is the rate currently applicable to higher-rate taxpayers. Examples are based on current rates of taxation. The gross premium is payable to Royal London Ireland and the tax relief must be claimed from Revenue.
Revenue limits, terms, and conditions apply. This information is based on current Pensions legislation and Revenue practice which may change in the future.)
It’s important that you know that the current maximum contributions allowed for tax relief are:
| Age | % Net Relevant Earnings |
| Under 30 | 15% |
| 30 – 39 | 20% |
| 40 – 49 | 25% |
| 50 – 54 | 30% |
| 55 – 59 | 35% |
| Over 60 | 40% |
A monetary maximum (currently €115,000) applies to the Net Relevant Earnings (earnings less allowable expenses) allowed for tax relief purposes. The limits apply to the total Pension Term Assurance premium and contributions to other approved pensions.
Additional Options
Indexation
You can choose to select Indexation on your Pension Term Assurance policy which helps protect against the negative effects of inflation.
Quite simply, Indexation ensures that your cover increases by 3% each year (in return for a 4% increase in your premiums each year). This helps to protect the real value of your cover as time passes, assuming an annual inflation rate of less than or equal to 3%.
Conversion Option
Pension Term Assurance is also available with a Conversion Option which could be a valuable added benefit, as it allows you to take out a new policy without any medical evidence requirement.
You pay a slightly higher premium should you wish to include the Conversion Option in your policy, and the option can be used at any time during the policy term up to your 70th birthday.
Important Note: The premium rates current at the time of conversion, appropriate to your age at the time will apply.
Full details of both the Conversion Option and Indexation and the Terms and Conditions that apply are contained in the relevant Policy Conditions booklet, which is available on request.
What Companies Offer Pension Term Assurance?
Executive Pension Term Assurance
Executive Pension Term Assurance is life insurance paid for by the employer. It will leave a lump sum for the family of the employee if they die while an employee.
More commonly referred to as Death-in Service Benefit the amount of cover is limited to 4 times the gross annual income of the employee
Frequently Asked Questions
Can Pension Term Assurance be assigned as security for a loan or mortgage
No
Is Pension Term Assurance the same as Section 785?
Pension Term Assurance also known as a Section 785 policy can be used by those not covered by a company pension scheme, to protect their families in the same way as a traditional level term assurance policy.
Tax Deductible Life Cover
Protect what matters to you and reduce your tax bill
If you are Self Employed or in non-pensionable employment then Pension Term Assurance is a clever way to put financial protection in place