Finding the life insurance policy that is right for you can be a difficult process. So spending too much of your own time trying to locate the right life insurance quote can be frustrating.
When you visit , be assured that you will locate a life insurance online quote that will meet your needs.
With our site, you will be put in touch with agents who are licensed to sell insurance in your respective state and who can provide you with free life insurance quote to make your life easier.
We Offer All Types of Life Insurance Quotes
Due to the fact that there are various kinds of life insurance on the market, a free life insurance quote from us allows you to choose from policies like term life, whole life, variable life, universal life and others.
The first step to securing life insurance quotes is to fill out a short form and then have one instant life insurance quote after another roll in. Your life insurance quotes will come via multiple carriers, allowing you a great variety and the ability to select the life insurance quote that is best for you.
We Help You Find the Right Life Insurance Policy
assists you in obtaining life insurance online quote comparisons from many reputable companies on all types of life insurance products.
If you're in need of term life insurance quotes, keep in mind that this type of policy may be the best choice for you if you do not want to pay larger premiums just to construct cash value or use investment features.
Term Life Insurance Quotes
Term life insurance may be the right choice if you do not want to pay higher premiums just to build cash value or use investment features. Free term life insurance quotes are as easy as visiting today.
We make things easy for you when you visit our site for an instant life insurance quote since we offer an easy to use interface that makes it simple, fast and convenient to obtain a life insurance quote that can save you real money.
You can get term life insurance quotes at any amount you feel is necessary, and you will be pleasantly surprised with how much money you can save on the exact same policy type and amount by going with a different company. By using us for your instant life insurance quote, you will see how you can add up to hundreds of dollars or more over time.
When you submit term life insurance quotes and decide on which policy is best for you, select a face value of the policy, which is the amount that is paid as a death benefit. You will also decide the term of the coverage, whether this is one year or 20, and you can decide whether to maintain the premiums and the face value at a level amount or as a variable amount.
As you will find when receiving a life insurance online quote, the quotes are very simple to compare for term life insurance rates and coverage. Make sure when you submit a life insurance quote that the quotes you are comparing all include the same relevant factors, including the amount of coverage, the term covered by the life insurance, and any restrictions.
If the life insurance quotes do not reflect all of the same factors then a thorough comparison cannot be undertaken and you could end up paying too much for your life insurance products.
Instant Life Insurance Quote
Comparing one free instant life insurance quote from the other will also benefit you if you choose other life insurance types as well.
Universal and variable policies will also widely differ in price as you will discover with your life insurance online quote, depending on the insurer offering the life insurance products when you receive your life insurance quote. By getting as many free online life insurance quotes as possible you are increasing the possibilities, and receiving a better range of prices and companies to select from.
One thing to keep in mind when getting life insurance quotes is that term life does not offer benefits that both universal and variable life does.
There are savings account components, investment components, and others that offered in both universal and variable life that do not come with term life. Be sure when you get an instant life insurance quote to study all the details. The life insurance quote that you do receive will note the fact that variable and universal life insurance policies do cost more though.
The idea behind getting a life insurance online quote is simple in that it allows you to make an informed decision before purchasing a policy.
With the costs for some types of insurance ever-increasing, it makes sense to get a life insurance online quote that can potentially save you money, and more importantly, little or no hassle.
Be sure to also look into the life insurer that you choose when you begin with an instant life insurance quote.
There are a number of independent companies which provide financial ratings of life insurers, which will help you as you peruse life insurance quotes. The life insurance ratings can be very relevant as they assist you in determining whether the free life insurance quote you receive is from a company with high financial security.
As you will discover when shopping for a life insurance online quote the claims history of a life insurer is also an important factor as you look at this instant life insurance quote and that one.
Remember that shopping for insurance can be challenging, but it doesn't have to be.
By visiting you can be assured that you will find a life insurance online quote that meets your needs.
Saturday, February 13, 2010
Sunday, April 13, 2008
Survivorship life insurance
Because I have been vocal with my criticism of the inappropriate sale of insurance-based products, some people have concluded that I have a prejudice against insurance and the agents who sell it. Actually, the opposite is true. Insurance can be a valuable tool to help individuals, families and businesses create, protect and distribute wealth.
In its most basic form, the purpose of any type of insurance is to transfer the risk of a negative occurrence from one's self to an insurance company. For example, you don't buy auto insurance because you want to benefit from it. But if you're involved in a collision, your auto insurance policy will pay potentially thousands of dollars to repair or replace your car.
The same risk transfer principle applies to life, health and disability insurance. The death of one partner in a working couple might affect the surviving family's retirement security or jeopardize the remaining parent's ability to pay for the education of children. If your death will cause financial harm to others, you should consider purchasing a life insurance policy whose proceeds can help to replace the loss of your earning capacity. Stay-at-home mothers, who don't earn a salary in the traditional sense, also have a significant economic worth. If a woman dies prematurely, leaving a spouse and small children behind, her husband would have to either quit his job or hire someone to care for the kids. Life insurance proceeds would help to cover the cost.
A survivorship policy is a special type of life insurance that isn't as widely understood as traditional life insurance. Also called "second-to-die" insurance, this type of policy insures two lives in one contract. The death benefit is paid only after the second person dies. For this reason, the cost of a survivorship policy is typically much lower than two separate policies with the same combined benefit.
Why would you use a survivorship policy? These policies have traditionally been used by wealthy families to help pay estate settlement costs and taxes. Although current federal estate tax law allows unlimited death transfers to surviving spouses, assets remaining in the survivor's estate can still be subject to estate taxation at the second death. In 2008, the federal exemption limit is $2 million. After 2010, the exemption is scheduled to return to a reduced level of $1 million unless Congress enacts new legislation. The proceeds from a survivorship policy can be used to pay those costs, keeping the couple's assets intact for their beneficiaries.
Survivorship insurance can be used to create a more substantial inheritance for your heirs. Because of its reasonable cost, a couple without significant wealth can buy a survivorship policy with a larger death benefit than they otherwise might be able to afford.
Parents of a child with special needs due to a physical or mental disability can use survivorship insurance to create a pool of money to care for that child after they are gone. If the child receives government assistance, it's essential to carefully plan for proper ownership and beneficiary designations to avoid inadvertently disqualifying the child's entitlements.
Besides its reasonable cost, one particular advantage of survivorship insurance is that otherwise uninsurable individuals can still qualify. Since the policy only pays a benefit after the second death, the poor health of one party isn't as big a concern to the insurance company as it would be for an individual policy.
Unless the policy has been set up to be paid in full over a specific number of years, it's possible that the survivor will be required to keep paying premiums after the first death. Before purchasing such a policy, be sure the premiums will continue to be affordable regardless who dies first.
These types of policies are often owned by irrevocable life insurance trusts, which are also named as the beneficiary of the policy proceeds; the language of the trust itself specifies the ultimate distribution to your heirs.
Special tax regulations permit the insured individuals to make gifts of cash to the trust, which are used by the trustee to pay the insurance premiums.
As with all types of life insurance, you need to determine an appropriate death benefit , which type of policy best suits your needs, and have a thorough understanding of the costs, guarantees, cash value, and other factors.
source:http://www.seacoastonline.com/apps/pbcs.dll/article?AID=/20080413/BIZ/804130315&sfad=1
In its most basic form, the purpose of any type of insurance is to transfer the risk of a negative occurrence from one's self to an insurance company. For example, you don't buy auto insurance because you want to benefit from it. But if you're involved in a collision, your auto insurance policy will pay potentially thousands of dollars to repair or replace your car.
The same risk transfer principle applies to life, health and disability insurance. The death of one partner in a working couple might affect the surviving family's retirement security or jeopardize the remaining parent's ability to pay for the education of children. If your death will cause financial harm to others, you should consider purchasing a life insurance policy whose proceeds can help to replace the loss of your earning capacity. Stay-at-home mothers, who don't earn a salary in the traditional sense, also have a significant economic worth. If a woman dies prematurely, leaving a spouse and small children behind, her husband would have to either quit his job or hire someone to care for the kids. Life insurance proceeds would help to cover the cost.
A survivorship policy is a special type of life insurance that isn't as widely understood as traditional life insurance. Also called "second-to-die" insurance, this type of policy insures two lives in one contract. The death benefit is paid only after the second person dies. For this reason, the cost of a survivorship policy is typically much lower than two separate policies with the same combined benefit.
Why would you use a survivorship policy? These policies have traditionally been used by wealthy families to help pay estate settlement costs and taxes. Although current federal estate tax law allows unlimited death transfers to surviving spouses, assets remaining in the survivor's estate can still be subject to estate taxation at the second death. In 2008, the federal exemption limit is $2 million. After 2010, the exemption is scheduled to return to a reduced level of $1 million unless Congress enacts new legislation. The proceeds from a survivorship policy can be used to pay those costs, keeping the couple's assets intact for their beneficiaries.
Survivorship insurance can be used to create a more substantial inheritance for your heirs. Because of its reasonable cost, a couple without significant wealth can buy a survivorship policy with a larger death benefit than they otherwise might be able to afford.
Parents of a child with special needs due to a physical or mental disability can use survivorship insurance to create a pool of money to care for that child after they are gone. If the child receives government assistance, it's essential to carefully plan for proper ownership and beneficiary designations to avoid inadvertently disqualifying the child's entitlements.
Besides its reasonable cost, one particular advantage of survivorship insurance is that otherwise uninsurable individuals can still qualify. Since the policy only pays a benefit after the second death, the poor health of one party isn't as big a concern to the insurance company as it would be for an individual policy.
Unless the policy has been set up to be paid in full over a specific number of years, it's possible that the survivor will be required to keep paying premiums after the first death. Before purchasing such a policy, be sure the premiums will continue to be affordable regardless who dies first.
These types of policies are often owned by irrevocable life insurance trusts, which are also named as the beneficiary of the policy proceeds; the language of the trust itself specifies the ultimate distribution to your heirs.
Special tax regulations permit the insured individuals to make gifts of cash to the trust, which are used by the trustee to pay the insurance premiums.
As with all types of life insurance, you need to determine an appropriate death benefit , which type of policy best suits your needs, and have a thorough understanding of the costs, guarantees, cash value, and other factors.
source:http://www.seacoastonline.com/apps/pbcs.dll/article?AID=/20080413/BIZ/804130315&sfad=1
Friday, March 14, 2008
Five tax-time insurance savings
For many people, the first thought that comes to mind when they think of insurance is costly premiums. But as April 15 approaches, remember that some insurance products come with tax advantages that can save you money.
Consider these five insurance tax reminders by the nonprofit Life and Health Insurance Foundation for Education (LIFE). Some of the benefits include using various types of insurance to pay your estate taxes, helping you accumulate money on a tax-free or tax-deferred basis and even lowering your taxable income.
— Life insurance death-benefit proceeds are generally income-tax free. As long as your beneficiaries are specifically named, they won’t have to pay income taxes on the proceeds they receive from your life insurance policy.
— The premiums you pay for long-term care insurance may be tax deductible. Sixty-five percent of 65-year-olds will require long-term care services at some point in their lives. For the many who will require services for several years or more, the cost can be astronomical, so it often makes sense to consider long-term-care insurance. Depending on your age, adjusted gross income and other medical expenditures, the premiums you pay may be tax deductible on your personal income tax. If you are self-employed, there are even greater tax advantages by paying your insurance premiums through your business.
— Cash values that accumulate in permanent life insurance policies are income tax-free or tax-deferred. The annual gains you earn from traditional investments and savings vehicles must be claimed as income on your tax return. However, the gain in cash value that builds up over time in permanent life insurance policies can be tax-free or tax-deferred, depending on how you withdraw the money later on. What’s more, these gains are not subject to the alternative minimum tax.
Funds accumulated in a deferred annuity are tax-deferred until you withdraw them. An annuity can provide you with a guaranteed lifetime income and thereby deliver some much-needed stability and predictability to your retirement security plan. Moreover, with an annuity all gains are tax-deferred until you retire — at which point you may be in a lower tax bracket than you are currently. The portion of the funds paid out that are made up of previously taxed principal will be received tax-free. If you’ve hit maximum limits in other tax-deferred retirement savings accounts, an annuity can be an attractive option.
— An irrevocable life insurance trust (ILIT) can help minimize estate taxes. While life insurance proceeds at death are almost always free from income tax, they may be subject to estate taxes if they bring your assets over the exemption limit set forth by the IRS. An ILIT immediately removes new life insurance policy proceeds from one’s taxable estate by setting up an independent legal entity that is the owner and beneficiary of the policy. The ownership of an existing policy may also be changed to an ILIT, but the death benefits won’t be tax-free until three years have passed from the date the ownership was transferred to the ILIT.
source:http://www.timesrecordnews.com/news/2008/mar/14/five-tax-time-insurance-savings/
Life Insurance for Children
Some companies sell it. Others hate it. Is it ever smart to buy life insurance on your children's lives?
It's a tricky subject. In a Bankrate article, the chairman of Allianz (NYSE: AZ) Life said that he believes selling life insurance for kids is contemptible. But many other companies offer it.
The other day, on our Insurance discussion board, Community member SlayTheDragon shared a scary account of how his 17-year-old daughter barely survived a car accident. It shook him up enough to wonder, given his family's tight finances, if he should get some insurance on his kids' lives to cover funeral expenses, should it ever come to that.
My take has long been to say no, few people need insurance on their children. Life insurance is meant to protect an income stream that can disappear due to a death. That's why parents should consider carrying it -- because others are depending on their income.
Many good points were made on the board:
1 Kook79 noted that parents might face steep medical bills, too. He also noted that children don't have high mortality rates or any financial issues that need to be resolved upon death. I can't argue with that -- the odds of needing this insurance are extremely low. We should all make sure we're protected against more likely calamities before tackling this grim one.
2 EmbraceableEwe noted: "The true problem is that you have insufficient funds, period -- i.e. for any 'emergency' which comes up." Exactamundo. We all need to have emergency funds available. Learn more about them in our Savings Center.
3 Esbita, who sells insurance, pointed out that riders can be added to parents' policies, providing for children.
There were many good points made, so I encourage you to check out the whole discussion.
My bottom line remains that it's probably best to bypass this insurance. Instead, though, you might take the money you'd have paid in premiums for it and park that in your emergency fund. That's a good way to help your child no matter what happens.
source:http://www.fool.com/personal-finance/insurance/2008/03/14/life-insurance-for-children.aspx
Saturday, March 1, 2008
Life insurance is essential for everyone
Life Insurance is a contract for payment of a sum of money to the person assured (or failing him/her, to the person entitled to receive the same) either in case of a death of the person insured or after completing the maturity period of the policy. We must accept that all of us, in different walks of life have many needs to meet, families to be taken care of and dreams to be fulfilled. It is possible that we may be able to fulfil our responsibilities towards these during our lifetime.
But will our families be able to maintain a manageable standard of living in our absence? To ensure that a financial protection plan through life insurance comes handy.
Planned properly, life insurance can also provide for the unusual needs like higher education of children or their marriages. The add on benefits (riders) that come with life insurance at a little extra cost, can also take care, to some extent, of the loss of income due to disability or pay for the medical expenses in case of critical illness and can generate higher benefits in case the person assured dies in an accident. Besides, through life insurance one can also plan for regular income after retirement.
Not expensive
It is wrong to believe that one needs to spend a fortune in premiums to get a good insurance cover. Here is a simple example of the value of the insurance cover one needs to take and how much premium one has to pay: Here is a 30 year old person, drawing a gross salary of Rs 6 lakh per annum (Rs 50,000 per month), and has a family of four (wife who does not work and two kids). His monthly household expenses is around Rs 20,000. If this person meets an untimely death, his family will still need Rs 20,000 a month to meet the expenses.
Assuming that this person had taken a insurance policy worth Rs 25 lakh for a 25 years term by paying an annual premium of around Rs 35,000 or Rs 2,916 per month, his family would get Rs 25 lakh on his death. This money, invested at an interest rate of 9 per cent would yield around Rs 19,000 per month. Thus by paying a premium of around Rs 2,900, this person can easily provide financial independence to his family.
Another pertinent point here is that this person being young will have to pay considerably lower premium than someone at the age of 45. This is the primary reason why we should buy life insurance at an early age.
Savings factor
Life insurance is also a good option for savings though one cannot compare an insurance product with other pure investment schemes for the simple reason that life insurance offers life cover and other products don’t.
One should always keep this in mind before comparing other investment options. In life insurance, unlike non-life products, you get maturity benefits on survival at the end of the term. In other words, if you take a life insurance policy for 20 years and survive the term, the part of the amount invested as premium in the policy will come back to you with added returns. In the unfortunate event of death within the tenure of the policy, the family of the deceased will receive the sum assured.
Now that most insurance companies are offering unit-linked insurance plans, investors can get stock market-linked return with life cover.
Insurance as tax planning
Insurance also serves as an excellent tax saving mechanism as the premium paid for self insurance or for the dependents in the family gets deducted from the taxable income.
The Government of India has offered tax incentives to life insurance products in order to facilitate the flow of funds into productive assets. At the peak tax rate of 30 per cent, savings can be substantial.
Planning for old age
Retirement, an age when every individual has almost fulfilled his responsibilities and looks forward to relaxing, can be painful if not planned properly. Have you considered the increasing inflation and taxes?
Will your investment offer you attractive returns under such circumstances? Will it take care of your family after you? An insurance policy will definitely take care of these and a lot more.
source:http://www.deccanherald.com/Content/Feb282008/bannking2008022754589.asp
But will our families be able to maintain a manageable standard of living in our absence? To ensure that a financial protection plan through life insurance comes handy.
Planned properly, life insurance can also provide for the unusual needs like higher education of children or their marriages. The add on benefits (riders) that come with life insurance at a little extra cost, can also take care, to some extent, of the loss of income due to disability or pay for the medical expenses in case of critical illness and can generate higher benefits in case the person assured dies in an accident. Besides, through life insurance one can also plan for regular income after retirement.
Not expensive
It is wrong to believe that one needs to spend a fortune in premiums to get a good insurance cover. Here is a simple example of the value of the insurance cover one needs to take and how much premium one has to pay: Here is a 30 year old person, drawing a gross salary of Rs 6 lakh per annum (Rs 50,000 per month), and has a family of four (wife who does not work and two kids). His monthly household expenses is around Rs 20,000. If this person meets an untimely death, his family will still need Rs 20,000 a month to meet the expenses.
Assuming that this person had taken a insurance policy worth Rs 25 lakh for a 25 years term by paying an annual premium of around Rs 35,000 or Rs 2,916 per month, his family would get Rs 25 lakh on his death. This money, invested at an interest rate of 9 per cent would yield around Rs 19,000 per month. Thus by paying a premium of around Rs 2,900, this person can easily provide financial independence to his family.
Another pertinent point here is that this person being young will have to pay considerably lower premium than someone at the age of 45. This is the primary reason why we should buy life insurance at an early age.
Savings factor
Life insurance is also a good option for savings though one cannot compare an insurance product with other pure investment schemes for the simple reason that life insurance offers life cover and other products don’t.
One should always keep this in mind before comparing other investment options. In life insurance, unlike non-life products, you get maturity benefits on survival at the end of the term. In other words, if you take a life insurance policy for 20 years and survive the term, the part of the amount invested as premium in the policy will come back to you with added returns. In the unfortunate event of death within the tenure of the policy, the family of the deceased will receive the sum assured.
Now that most insurance companies are offering unit-linked insurance plans, investors can get stock market-linked return with life cover.
Insurance as tax planning
Insurance also serves as an excellent tax saving mechanism as the premium paid for self insurance or for the dependents in the family gets deducted from the taxable income.
The Government of India has offered tax incentives to life insurance products in order to facilitate the flow of funds into productive assets. At the peak tax rate of 30 per cent, savings can be substantial.
Planning for old age
Retirement, an age when every individual has almost fulfilled his responsibilities and looks forward to relaxing, can be painful if not planned properly. Have you considered the increasing inflation and taxes?
Will your investment offer you attractive returns under such circumstances? Will it take care of your family after you? An insurance policy will definitely take care of these and a lot more.
source:http://www.deccanherald.com/Content/Feb282008/bannking2008022754589.asp
Reliance Life Insurance launches Reliance Wealth + Health Plan
Life insurance major Reliance Life Insurance has launched the first-of-its-kind Reliance Wealth + Health Plan, a unit linked plan coupled with health benefits.
The launch was announced by Mr. P. Nandagopal, CEO, Reliance Life Insurance. The Reliance Wealth + Health Plan is the first wealth creation product that also offers comprehensive health coverage as a key differentiator in the domestic insurance market.
"The unique proposition of this plan is that it offers complete investment flexibility to grow wealth by investing in different plans and funds and also provides the financial support for managing health expenses. It is in line with our strategy to offer best-in-class products to our customers" said Nandagopal while launching the product.
The plan offers the convenience of cashless payments, cover for the entire family under one plan and the option to increase life cover to provide additional security.
"With annual premium as low as Rs 10,000 to Rs 12,000 per annum, the insured can get health and saving benefits and protect himself/herself against high or unexpected medical bills. The plan provides lumpsum benefit to take care of hospitalization expenses, which include daily hospitalization expenditure, intensive care unit expenses and post-hospitalization spending in the form of recuperation benefits", he said.
The plan offers enhanced health coverage against life threatening illnesses and major surgeries, with all insured having an option to cover themselves against untoward incidents as well. Likewise that the amount towards medical expenses can be availed a number of times in a year and up to 95 per cent of the fund value can be withdrawn during the policy period.
"The policyholder can avail all the benefits with all features of ULIP for maximum flexibility and liquidity, minimizing risk, maximizing returns and averaging cost of units. The plan also contains coverage's with a bouquet of riders available for all lives under the policy and has significantly lower charges and free switches for best risk appetite fund. This is the only plan that provides such additional value with a maturity benefit at the end of the policy term" said Mr Nandagopal.
The product is expected to contribute 35-40% of the total sales of the January-March quarter, 2008.
''We expect a significant business growth on the back of this product, as so far people have not been provided with adequate choice of quality insurance products,'' he added.
source:http://economictimes.indiatimes.com/News/News_By_Industry/Healthcare__Biotech/Reliance_Life_Insurance_launches_Reliance_Wealth__Health_Plan/articleshow/2827464.cms
The launch was announced by Mr. P. Nandagopal, CEO, Reliance Life Insurance. The Reliance Wealth + Health Plan is the first wealth creation product that also offers comprehensive health coverage as a key differentiator in the domestic insurance market.
"The unique proposition of this plan is that it offers complete investment flexibility to grow wealth by investing in different plans and funds and also provides the financial support for managing health expenses. It is in line with our strategy to offer best-in-class products to our customers" said Nandagopal while launching the product.
The plan offers the convenience of cashless payments, cover for the entire family under one plan and the option to increase life cover to provide additional security.
"With annual premium as low as Rs 10,000 to Rs 12,000 per annum, the insured can get health and saving benefits and protect himself/herself against high or unexpected medical bills. The plan provides lumpsum benefit to take care of hospitalization expenses, which include daily hospitalization expenditure, intensive care unit expenses and post-hospitalization spending in the form of recuperation benefits", he said.
The plan offers enhanced health coverage against life threatening illnesses and major surgeries, with all insured having an option to cover themselves against untoward incidents as well. Likewise that the amount towards medical expenses can be availed a number of times in a year and up to 95 per cent of the fund value can be withdrawn during the policy period.
"The policyholder can avail all the benefits with all features of ULIP for maximum flexibility and liquidity, minimizing risk, maximizing returns and averaging cost of units. The plan also contains coverage's with a bouquet of riders available for all lives under the policy and has significantly lower charges and free switches for best risk appetite fund. This is the only plan that provides such additional value with a maturity benefit at the end of the policy term" said Mr Nandagopal.
The product is expected to contribute 35-40% of the total sales of the January-March quarter, 2008.
''We expect a significant business growth on the back of this product, as so far people have not been provided with adequate choice of quality insurance products,'' he added.
source:http://economictimes.indiatimes.com/News/News_By_Industry/Healthcare__Biotech/Reliance_Life_Insurance_launches_Reliance_Wealth__Health_Plan/articleshow/2827464.cms
Tuesday, February 26, 2008
Making the first move
If you are looking to invest in an individual savings account (ISA) for the first time you have picked the right moment. The options for investing are about to be simplified and expanded.
Until 5 April you can invest £7,000 into an ISA each year, either through regular, usually monthly, savings or an annual lump sum. The returns from this investment, either in the form of income or capital gains, will be tax free.
From 6 April, however, you will be able to invest up to £7,200 each year into an ISA. But if you have not invested for the tax year 2007/08 you still have time to benefit from tax-free savings for this financial year.
Wrapping up your investments
An ISA is not an investment – it is a wrapper that creates a tax-free environment for your investment in stocks and shares, or cash. Again, under current rules, you can invest the whole of your £7,000 ISA allowance into a stocks and shares ISA, called a ‘maxi-ISA’. Or you can split your allowance and invest in two ‘mini-ISAs’, with up to £4,000 in stocks and shares, and £3,000 in cash. Once you have committed yourself to either a maxi or mini ISA you can’t, within that tax year, change your mind.
But this won’t be a concern for much longer because after 6 April the maxi/mini ISA options, which were deemed to be confusing for investors, will be abolished. The choice will be much simpler – you can either invest £7,200 into a stocks and shares ISA or £3,600 into a cash ISA and the remainder (i.e. up to £3,400) into a stocks and shares ISA. You will also be able to re-invest the £3,600 from cash into stocks and shares at a later date if you wish.
To make the definition clearer, however, within a stocks and shares ISA you can hold individual equities, or collective investment products such as unit trusts, investment trusts and open-ended investment companies (OEICs) and life insurance products.
Within a cash ISA you can hold deposit accounts from banks and building societies, national savings products and other cash-based products like money market funds.
There are also eligibility rules to ISA investing. You must be older than 16, although up until age 18 you can only invest in a cash ISA. You must also be a UK resident for tax purposes and you can’t invest in an ISA on behalf of anyone else or own one jointly with anyone else. But each individual can hold one, so couples would be able to invest £14,000 (or £14,400 after 6 April) in a tax-free wrapper each year.
Also under the new rules, if you have money in a child trust fund account, once the child becomes 18 that money can be rolled over into an ISA.
The key attractions
But why invest within an ISA? The real advantage is the tax-free aspect. You will not pay any capital gains tax on your investment as it grows or when you cash it in. There are also income tax benefits, in that money held in a cash ISA benefits from a 20 per cent tax reclaim. If corporate bonds are held with the ISA any interest on those have a 20 per cent tax-reclaim entitlement.
Higher-rate taxpayers benefit by being exempt from paying 32.5 per cent tax on dividends on equity investments within their ISA. While interest paid on cash held temporarily within a stocks and share ISA is taxed at 20 per cent, there is no further
tax payable for high-rate taxpayers, and there is no further liability to income tax on dividends received from your ISA.
The beauty of it all is that your ISA manager, unless they receive income gross of tax, will reclaim the tax savings from HM Revenue and Customs on your behalf. ‘Someone who started subscribing to an ISA when they launched in 1999 will, by next year, have had the opportunity to shelter almost £60,000 in subscriptions from CGT,’ says James Daly, a representative at online broker TD Waterhouse Investor Centre. ‘Though ISAs can reap significant gains for investors, they are also a cost-effective way for long-term savers to maximise returns on smaller contributions.’
He adds, ‘Even if the portfolio is modest today, small sums invested over ten years or more, if invested well, can grow significantly by the time the investor is ready to cash the ISA in. Anyone who is planning to invest more than a few thousand pounds
in the stock market can reasonably expect to make a capital gain in excess of their annual allowances at some time in the future, and by choosing an ISA carefully they can protect their investment from CGT in a cost-effective way.’
So you don’t have to invest the full annual ISA allowance. However, as Daly says, ‘An ISA can be particularly useful for higher-rate taxpayers after income, because it caps the tax on dividends at ten per cent, although it does not eliminate it like it used to, as the ten per cent tax credit on equity dividend payments within an ISA was abolished in 2004.’
Many ways to save
If you are investing for the first time there is a myriad of ways you can start ISA saving, either direct with the ISA provider, which could be a fund management house, bank or building society, or via an independent financial adviser (IFA) or a stockbroker.
Depending on the service you opt for, an IFA or stockbroker will either invest in the things you tell them to but advise you on where and when to do it, or manage your investments for you, in line with your instructions, on a discretionary basis.
You will, of course, have to pay for these extra levels of service and it is worth shopping around for the best deal – and for the IFA or stockbroker with whom you feel you can have a trusted relationship.
‘Novice investors can use a broker who will manage the ISA on their behalf,’ says Daly. ‘They will assist in the fund choices and keep the investor regularly updated on the ISA’s performance. If an investor wishes to manage their own ISA without advice they may want to consider using an online broker, for which the charges tend to be lower. To get the most from regular smaller investments, the charges to manage and trade within an ISA must be low.’
Generally speaking, a stockbroker will not offer cash ISAs. ‘Private client stockbrokers should be one of the first ports of call for direct investment into the stock market,’ says Derek Gawne, business development director at stockbroker WH Ireland, which has branches throughout the UK.
He adds, ‘As for whom should use stockbrokers, it depends on the risk profile of the individual and what they are looking for. Clients can have as much or as little involvement as they want. They can be an execution-only client, where they give instructions and choose their own investments, or they can have full discretionary status, where we do it all for them. Or there are the advisory services in between.’
There are also online stockbrokers whose transaction costs are lower, but where the stockbroker is literally just transacting your instructions and there is no advice. Gawne concedes that because the bulk of his business is advising investors, the charges
are not as cheap as for transaction-only brokers.
‘We believe we are adding value
for the charges,’ he says. ‘We charge
a percentage of the value of each transaction based on what has been agreed with the client. We believe it
is the relationship that matters, and the individual client has a client adviser here who would be their
main contact.’
A broad spread
The key aspect of any investment is
to diversify – to spread your assets across a range of different investments. In that way, you have a chance of offsetting losses from one sort of investment against gains in another.
Once you are invested in an ISA, your money is not locked away: you can withdraw it at any time. But you must bear in mind that if you do, you use up the respective tax-free portion of your annual ISA allowance for that year.
ISAs have to be top of your list as an investor. If you have a lot to invest it makes sense to invest in ISAs first off to get the tax-free savings. If you have a little to invest the same argument stands. You may want to be saving for the short or long term, but you can access your money from an ISA so they can suit savings for the proverbial rainy day, school fees or special holidays, or for the longest holiday of all – retirement.
source:http://www.whatinvestment.co.uk/saving-money/saving-and-banking/306816/making-the-first-move.thtml
Until 5 April you can invest £7,000 into an ISA each year, either through regular, usually monthly, savings or an annual lump sum. The returns from this investment, either in the form of income or capital gains, will be tax free.
From 6 April, however, you will be able to invest up to £7,200 each year into an ISA. But if you have not invested for the tax year 2007/08 you still have time to benefit from tax-free savings for this financial year.
Wrapping up your investments
An ISA is not an investment – it is a wrapper that creates a tax-free environment for your investment in stocks and shares, or cash. Again, under current rules, you can invest the whole of your £7,000 ISA allowance into a stocks and shares ISA, called a ‘maxi-ISA’. Or you can split your allowance and invest in two ‘mini-ISAs’, with up to £4,000 in stocks and shares, and £3,000 in cash. Once you have committed yourself to either a maxi or mini ISA you can’t, within that tax year, change your mind.
But this won’t be a concern for much longer because after 6 April the maxi/mini ISA options, which were deemed to be confusing for investors, will be abolished. The choice will be much simpler – you can either invest £7,200 into a stocks and shares ISA or £3,600 into a cash ISA and the remainder (i.e. up to £3,400) into a stocks and shares ISA. You will also be able to re-invest the £3,600 from cash into stocks and shares at a later date if you wish.
To make the definition clearer, however, within a stocks and shares ISA you can hold individual equities, or collective investment products such as unit trusts, investment trusts and open-ended investment companies (OEICs) and life insurance products.
Within a cash ISA you can hold deposit accounts from banks and building societies, national savings products and other cash-based products like money market funds.
There are also eligibility rules to ISA investing. You must be older than 16, although up until age 18 you can only invest in a cash ISA. You must also be a UK resident for tax purposes and you can’t invest in an ISA on behalf of anyone else or own one jointly with anyone else. But each individual can hold one, so couples would be able to invest £14,000 (or £14,400 after 6 April) in a tax-free wrapper each year.
Also under the new rules, if you have money in a child trust fund account, once the child becomes 18 that money can be rolled over into an ISA.
The key attractions
But why invest within an ISA? The real advantage is the tax-free aspect. You will not pay any capital gains tax on your investment as it grows or when you cash it in. There are also income tax benefits, in that money held in a cash ISA benefits from a 20 per cent tax reclaim. If corporate bonds are held with the ISA any interest on those have a 20 per cent tax-reclaim entitlement.
Higher-rate taxpayers benefit by being exempt from paying 32.5 per cent tax on dividends on equity investments within their ISA. While interest paid on cash held temporarily within a stocks and share ISA is taxed at 20 per cent, there is no further
tax payable for high-rate taxpayers, and there is no further liability to income tax on dividends received from your ISA.
The beauty of it all is that your ISA manager, unless they receive income gross of tax, will reclaim the tax savings from HM Revenue and Customs on your behalf. ‘Someone who started subscribing to an ISA when they launched in 1999 will, by next year, have had the opportunity to shelter almost £60,000 in subscriptions from CGT,’ says James Daly, a representative at online broker TD Waterhouse Investor Centre. ‘Though ISAs can reap significant gains for investors, they are also a cost-effective way for long-term savers to maximise returns on smaller contributions.’
He adds, ‘Even if the portfolio is modest today, small sums invested over ten years or more, if invested well, can grow significantly by the time the investor is ready to cash the ISA in. Anyone who is planning to invest more than a few thousand pounds
in the stock market can reasonably expect to make a capital gain in excess of their annual allowances at some time in the future, and by choosing an ISA carefully they can protect their investment from CGT in a cost-effective way.’
So you don’t have to invest the full annual ISA allowance. However, as Daly says, ‘An ISA can be particularly useful for higher-rate taxpayers after income, because it caps the tax on dividends at ten per cent, although it does not eliminate it like it used to, as the ten per cent tax credit on equity dividend payments within an ISA was abolished in 2004.’
Many ways to save
If you are investing for the first time there is a myriad of ways you can start ISA saving, either direct with the ISA provider, which could be a fund management house, bank or building society, or via an independent financial adviser (IFA) or a stockbroker.
Depending on the service you opt for, an IFA or stockbroker will either invest in the things you tell them to but advise you on where and when to do it, or manage your investments for you, in line with your instructions, on a discretionary basis.
You will, of course, have to pay for these extra levels of service and it is worth shopping around for the best deal – and for the IFA or stockbroker with whom you feel you can have a trusted relationship.
‘Novice investors can use a broker who will manage the ISA on their behalf,’ says Daly. ‘They will assist in the fund choices and keep the investor regularly updated on the ISA’s performance. If an investor wishes to manage their own ISA without advice they may want to consider using an online broker, for which the charges tend to be lower. To get the most from regular smaller investments, the charges to manage and trade within an ISA must be low.’
Generally speaking, a stockbroker will not offer cash ISAs. ‘Private client stockbrokers should be one of the first ports of call for direct investment into the stock market,’ says Derek Gawne, business development director at stockbroker WH Ireland, which has branches throughout the UK.
He adds, ‘As for whom should use stockbrokers, it depends on the risk profile of the individual and what they are looking for. Clients can have as much or as little involvement as they want. They can be an execution-only client, where they give instructions and choose their own investments, or they can have full discretionary status, where we do it all for them. Or there are the advisory services in between.’
There are also online stockbrokers whose transaction costs are lower, but where the stockbroker is literally just transacting your instructions and there is no advice. Gawne concedes that because the bulk of his business is advising investors, the charges
are not as cheap as for transaction-only brokers.
‘We believe we are adding value
for the charges,’ he says. ‘We charge
a percentage of the value of each transaction based on what has been agreed with the client. We believe it
is the relationship that matters, and the individual client has a client adviser here who would be their
main contact.’
A broad spread
The key aspect of any investment is
to diversify – to spread your assets across a range of different investments. In that way, you have a chance of offsetting losses from one sort of investment against gains in another.
Once you are invested in an ISA, your money is not locked away: you can withdraw it at any time. But you must bear in mind that if you do, you use up the respective tax-free portion of your annual ISA allowance for that year.
ISAs have to be top of your list as an investor. If you have a lot to invest it makes sense to invest in ISAs first off to get the tax-free savings. If you have a little to invest the same argument stands. You may want to be saving for the short or long term, but you can access your money from an ISA so they can suit savings for the proverbial rainy day, school fees or special holidays, or for the longest holiday of all – retirement.
source:http://www.whatinvestment.co.uk/saving-money/saving-and-banking/306816/making-the-first-move.thtml
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