Qualifying Insurance Policy

Life insurance policies used to be categorised by the taxman as qualifying or non-qualifying for tax relief purposes. Qualifying policies were largely regular premium contracts which pay a guaranteed minimum sum on death.

Tax relief was available at 12.5 - but this was withdrawn for all new policies taken out after March 1984.

These days the only benefit of a qualifying policy is that there will be no further tax to pay on the pay out provided it is kept going for at least ten years. This is especially good news for a higher rate taxpayer who would face an extra tax charge on gains from the policy if it were not qualifying.

There is a set of rules which determine whether a policy is qualifying. e.g. for an endowment policy to be qualifying it needs to be kept in place for three quarters of the term if this is less than ten years. it is best to ask the insurer or your financial adviser whether a policy is qualifying.

See Also Moneyextra.com Insurance Service

2009-02-17 00:00:00 © Moneyextra.com