Can I get tax relief on my life insurance?

22 February 2013

Q

I would be grateful for advice on whether my life insurance policy should attract tax relief. I took out the 25-year policy with Sun Alliance on 1 September 1983, with the regular annual premiums attracting tax relief as it was a qualifying policy.On maturity in 2008, I asked Phoenix Life (which had taken over the company) to convert the policy to a whole of life policy with continuing annual premiums, as allowable in the original policy terms and conditions.However, it only converted the policy in 2011, after I had reminded Phoenix of my written instruction to do so at the maturity date in 2008.Phoenix now says the policy post-maturity no longer attracts tax relief but will not tell me why. I am wondering if its three-year delay caused it to set up a new policy that doesn't attract tax relief, rather than converting the original one.
From
PJ, Farnborough

A

Life Assurance Premium Tax Relief (LAPR) was available on policies taken out before 13 March 1984. It came with certain conditions and these included "provided they are not subsequently varied so as to increase the benefits or extend the term".

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Despite Phoenix not covering itself in glory with regards to your request to apply a policy feature of converting to a whole of life policy, it would appear that it is not to blame for the loss of tax relief on the replaced policy. Rather, it was the amendment to the policy which, in the light of the conditions of LAPR, meant that tax relief was no longer available.