Investment Life Assurance
Life Assurance and Taxes
Life Assurance is a contract whereby the Insurer undertakes to pay out a certain cash sum at a point of time in the future. That might be at the expiry date of the contract, provided the insured is still alive at the time. It might also be somewhere during the term of the policy, at death of the insured.
This ‘death cover’ is specifically designed to leave others well provided. But the other component of this type of cover, the end payment, represents a highly suitable way of building up capital for the future. Something that can be used to pay of the mortgage, pay for your children’s education or create more padding of the nest egg.
The Taxman
There are definite tax advantages to having a life assurance policy as a savings vehicle; in fact, ‘capital builder’ seems a better name for it. Today there are still many ‘capital builder’ life policies that are completely exempt from tax on capital gains and capital returns. Tax free, in other words.
Particular examples of this would be:
- Capital building insurance policies used to pay of the mortgage
- Capital building insurance policies designed to build up your pension
All in all these types of capital building life assurance policies are an ideal savings vehicle, sometimes even exempted from taxes.
