Archive for March, 2012

Life Insurance Premiums To Rise In 2013

The ongoing cost of both health and life insurance could rise by up to 30% in 2013 as a set of newly created tax rules are fully expecting to hit insurance profits.
Life Insurance Premiums Set To Rise
For the first time in over an estimated 10 years, the cost of life insurance is expected to rise significantly.

Because of this, many financial advisors and insurance brokers are advising people that if they need cover then they should buy it before the prices rise.

It has been widely reported that new European legislation which is due to come into force at the end of this year will make it compulsory for all insurers to offer unisex rates on all types of insurance including critical illness cover. This is expected to significantly increase the cost of insurance for women as their premiums are usually less as they are more likely to not die early and therefore make a claim on their insurance policy.

What a lot of people won’t realise is that new tax rules will be rolled out and implemented at the same time which will force up the cost of insurance right across the board and any gains which men might see from potentially cheaper unisex rates will effectively be wiped out by the new tax.

At the moment, UK insurance providers are permitted to offset any costs of their life insurance business against any profits which they have made on their investments. However, during the last budget it was announced that a new legislation was to be introduced which will effectively close down this loophole.

Whilst this may provide more tax for the treasury, it is likely to increase insurance costs for life insurance providers which in turn is expected to be passed on to the consumer.

ISA Deadline Approaching

Well it’s that time of year again when investment providers are tripping over themselves trying to sell their ISAs. The reason being is that this years (2012) ISA deadline is fast approaching (the 5th April 2012).Stocks and Shares ISA

So what does this mean to you?

Well basically, if you didn’t already know, an ISA (Individual Savings Account) is a savings account where you pay no tax on any interest, dividends or bonuses earned from your cash/investment held within the account. Each year you can invest a maximum ammount and if you do not use up this allowance by the 5th April then you will lose it as it cannot be carried over to the next year.

For the tax year 2011/2012 the ISA allowance is:

You can hold both a cash and a stocks and shares isa in the same year should you wish but if you do subscribe to both types of isas then the total combined allowance is £10,680.

A Cash ISA invests in cash which is held within the account. These types of ISAs appeal to many investors as it pays a fixed percentagerate so you know exactly how much your ISA will earn you. However, the downside to investing in cash is that it is vulnerable to the eroding effects that inflation can have.

A Stocks and Shares ISA is where you invest your money into funds and depending upon how well these funds perform will determin how well your ISA will perform. Many stocks & shares providers offer a range of funds with which you can invest in.

For example, Sensible Investments Ltd offer a choice of three different funds which are all managed by Prudential. Their range of actively managed funds include cautious, balanced and adventurous portfolios and depending upon the type of investor you are will determine which fund appeals to you. However, when opening Stocks and Shares ISA account through Sensible Investments Ltd, you can mix your funds. For example, should you invest £10,680, you could place half of your money into the Cautious fund and split the other half between the two other funds like below:

£10,640 total investments in a Sensible Investments Ltd Stocks and Shares ISA

  • 50% (£5,340) into Prudentials Cautious Fund
  • 25% (£2,670) into Prudentials Balanced Fund
  • 25% (£2,670) into Prudentials Adventurous Fund

By splitting your investment into different funds helps spread the risk and you can change your subscriptions at any time (if one fund performs particularly well then you could pool all your money into that fund to try and maximise performance).

For further details about Sensible Investments Ltd range of ISAs please visit their dedicated stocks and shares isa site at www.stocksandsharesisa.org.uk