Life insurance U-turn affects 150,000

Mon, 18 Dec 2006

150,000 insurance customers have been cast into a state of confusion following a U-turn decision on life insurance by Gordon Brown last week.

The Chancellor decided that pension term assurance, a heavily advertised way of getting tax relief on life insurance premiums, would be disintegrates shortly after its creation. PTA was the answer to many individuals’ needs, because it allowed consumers to purchase life insurance policies through a pension .

The savings could have been considerable, over 20 per cent for standard rate taxpayers but up to 40 per cent for higher-rate taxpayers. A considerable number of customers were attracted to the policy, and over 150,000 plans have been sold or were in the underwriting process. The U-turn was a small part of the pre-budget report issued by Mr. Brown.

One expert, Jon Briggs of the IFA Hargreaves Lansdown, said: "The treasury was made well aware of the likely impact of their new pension legislation. They reassured firms that they had no problem with it but only eight months later have changed their minds."
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