SPONSORED FEATURE: FRIENDS PROVIDENT
PTA – a protection
Friends Provident’s life cover product allows customer that it provides a pension and is offered without waiver ben-
eﬁt or critical illness.
intermediaries to offer clients tax relief on Tax Relief Life Cover is now available online only through our award
their premiums, reducing their contributions winning eSelect system, allowing advisers to offer customers taking out
life cover with Friends Provident the opportunity to enjoy the beneﬁt of
by up to 40% tax relief on their premiums. This is good news because, on average,
premiums for Tax Relief Life Cover are 10%-15% cheaper than our
standard life cover.
On 6 April 2006 (A-Day), the Pensions Act 2004 came into effect intro- “On A-Day, Who is it suitable for?
ducing new regulations and fewer restrictions on the sale of Pension
Term Assurance (PTA). For protection advisers, this change in legislation Friends Provident Tax Relief Life Cover from FRIENDS® is appropriate for customers who
has presented an attractive opportunity. was one of the have a need for basic life cover and are eligible for tax relief. It is also an
PTA is no longer restricted to the pensions market and can now be attractive solution for higher rate taxpayers because they can reclaim an
sold under Insurance Conduct of Business (ICOB) rules. This combined few providers additional 18% of the premium after basic rate tax through their annual
with the removal of complex eligibility requirements and tax relief on the that launched a tax return, reducing their net premium to 60% of the gross.
premiums has allowed PTA to add a whole new dimension to the pro-
tection market for both advisers and their customers.
pure protection plex may not be suitable for those with large pensions savings or com-
arrangements because contributions are subject to annual and
PTA offering” lifetime allowances.
What is PTA?
PTA is a basic life cover product, which is designed to provide a cash sum Allowances on contributions
on death within a speciﬁed term. Although it does not include critical Tax Relief Life Cover premiums form part of a customer’s annual pension
illness cover, the product has the added beneﬁt that premiums are eli- allowance. The annual allowance is the total payments that can be
gible for basic and higher rate income tax relief. These are paid net of saved in all registered schemes in any one year. If the total payments to
basic rate tax and higher rate taxpayers can reclaim extra relief through all registered pension schemes exceeds the annual tax allowance for
their tax return. that year there is a 40% tax charge. For the next ﬁve year’s limits see the
On A-Day, Friends Provident was one of the few providers that table below.
launched a pure protection PTA offering written under ICOB rules. Called Payments from Tax Relief Life Cover also form part of a customer’s
Tax Relief Life Cover, it has been named to avoid any confusion with the lifetime allowance. This is the total value of their pension fund and
includes pay out from PTA policies. Any amount above the lifetime limit
allowance is subject to a tax charge of 55% if paid as a lump sum. For
the next ﬁve years lifetime allowances see the table below:
ALLOWANCES ON CONTRIBUTIONS
Tax year Annual Lifetime
2006/2007 £215,000 £1.5m
2007/2008 £225,000 £1.6m
2008/2009 £235,000 £1.65m
2009/2010 £245,000 £1.75m
2010/2011 £255,000 £1.8m
Of course tax rules may change in the future and should the Govern-
ment change these, Friends Provident provides the facility to alter the
policy back to standard life cover if required. The value of any tax relief
depends on your customers circumstances.
Advisers can apply for Tax Relief Life Cover direct through eSelect or via
The Exchange, Assureweb or Webline. More information on Tax Relief
Life Cover is also available at www.friendsprovident.com/taxreliefcover.
| 16 | Guide to Life | April 2006 www.ifaonline.co.uk