Pension Term Assurance or PTA is one of UK’s unique assurance plans that could rival the regular life insurance plan. Under PTA, the beneficiaries will receive a lump sum in cash or the money could be directed in paying for the remaining mortgage or other type of loans.

Pros:
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  • Flexible – This type of insurance plan is not only directed for beneficiaries to receive cash. Upon death, the policy holder should be qualified to receive financing in paying for the mortgage. This removes the burden to those who will be inheriting the property. Payment is also flexible – there are insurance providers that allow annual payment but it is highly recommended to pay PTA monthly as this could be taken out automatically in the policy holder’s salary.
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  • Very affordable – As a life insurance, PTA will never cost the policy holder. Paying for this type of insurance never ends and will only stop when you reach 75 but the amount is very tolerable considering that you will be paying for your mortgage or leave a good amount of money for the people you love.

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Cons:

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  • Tax Allowance – This is a little bit unfortunate since the law was only passed August 1, 2007 (known as A Day) that disables everyone from enjoying tax cuts. The pension contribution could be jeopardized if the PTA policy holder is not earning enough. Although the pension contribution could be paid, it could lessen.
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  • Fewer providers – Unfortunately, not every insurance provider offer this type of assurance plan. Because the demand for this product is a higher, companies are free to increase their premiums. But it is still lower in any standards. So you better get PTA before the premium increases.
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  • Effect on lifetime allowance – Since the beneficiaries will be receiving cash from the deceased policy holder, the lifetime benefit plan might be affected. Although the beneficiaries will receive two benefits at the same time, the lifetime could be less.
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  • Stand-alone only – Even though it is affordable, it is still relatively expensive compared to other insurance plans. The main reason for this is that PTA can never be combined to other insurance plans. Insurance providers chose not to integrated PTA to other products since PTA has an effect on personal taxes and other type of loans

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Choosing the Right PTA

PTA is a little bit complicated in their conditions and terms. That is why careful consideration should be done before choosing the provider. You could compare the rates of PTA offered by different companies however you might end up more confused than before.

The best way to select a PTA is to seek help from advisers in the industry. There are people who are expert in this industry and they know what type of PTA is perfect for you. They can also give you advice on how to lessen your premium.

Ultimately, experts will also advise you whether or not you need this type of assurance plan. It is one of the best assurance plans related to life insurance but careful though should be taken before signing up for one.