Financial Services > Protection > Life Assurance


In its most basic form life assurance is an agreement to pay a set sum of money if one or more people die whilst the policy is in force.

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When these policies first became available in the 18th century there were a host of problems. Some people took out policies on the lives of friends, neighbours or vague acquaintances who simply looked ill and in more extreme cases they would even kill the person who had been insured.

That is why laws were introduced to make sure that there was a legitimate reason for taking the policy out in the first place. It is worth noting that the justification for the policy has to be present when the policy begins, but it does not have to remain there for the duration of the policy. This means that if a debt is repaid, a business partnership breaks up or there is a divorce, there is no need to cancel the original policy.

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Numerous variations have arisen over the years to this basic type of insurance. Some policies provide an increasing amount of protection throughout its life, whilst others reduce in value - and yet another variety includes an investment element too.

Most life assurance policies provide a benefit which is tax-free - because they comply with a host of rules laid down by Her Majesty's Revenue & Customs.

There are a small number of policies that are termed "non-qualifying" and the tax treatment of benefits under those policies can be very different. Please do not purchase a non-qualifying policy unless you fully understand the possible tax consequences. Corrigans will be happy to discuss your personal circumstances in relation to any non-qualifying policy.

Whilst the proceeds from most policies are not subject to any Income Tax or Capital Gains Tax, this does not mean that the investment has been tax-free. The life assurance company will already have paid Corporation Tax on profits made together with Capital Gains Tax and the dividends received by the investment will also have suffered tax deducted at source. For many people there are more attractive investment contracts available that suffer less tax and so a greater reward can be enjoyed for an identical exposure to risk.

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In recent years many insurers have included terminal illness benefits within life assurance policies. This accelerates the time at which the policy benefits are paid - if the doctor certifies that the insured is unlikely to survive for 12 months. You will appreciate that this benefit does not apply during the last year of the policy cover, but in all other circumstances it can improve the quality of the remaining life for both the insured person, and their family and friends.