Welcome relief for the few, but relief for all would help close protection gap

Emma Walker, protection manager at price comparison website moneysupermarket.com, responds to HMRC’s Pensions Term Assurance announcement:

"Thousands more customers now have the peace of mind that their life insurance applications will be processed, plus the significant benefit of tax relief on their premiums. But this tax relief for the few should really remain in place for all-comers.

“Just six months after the first PTA products hit the market, already one in ten people with life insurance had been attracted by the offer of tax relief on their premiums. Some had switched from an existing life insurance policy simply to save money, but for many others tax relief acted as an incentive to take out cover for the first time.

“In its consultation, the Government must weigh up the cost of tax relief against the clear opportunity to shrink the UK’s enormous financial protection gap. Our research showed that this simple incentive was having promising effects on the market for life insurance, and we will be urging the Government to think hard before killing this trend in its infancy.

“We are concerned about both the immediate and the longer-term impact of this latest Government u-turn. The coming months of consultation and uncertainty could well lead many to delay taking out cover or worse still to abandon this difficult decision altogether.”