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Assigned deal could boost PTA business

The Revenue is to allow mortgage lenders to be assigned the rights to death benefits on pension term assurance policies in a move which is expected to boost sales of PTA products.

Legislation from the Revenue was unclear on whether customers taking out mortgages where the provider required them to have life insurance with the loan could take out PTA policies or were restricted to ordinary term life cover.

But the Revenue says mortgage providers and banks can be assigned the death benefits of PTA policies.

Royal Liver technical manager Mark Davies says this is positive news for PTA providers, consumers and brokers. He says gross premium commission from sales of PTA tend to be slightly higher than commission from ordinary term life cover, which could mean brokers benefit.

Davies says: “This is good news and highlights the attraction of pension term assurance over ordinary life cover by removing one of the barriers to the sales of these policies. It is good for consumers who will be paying lower premiums.”

The Revenue clarification states: “Section 172 FA 2004 treats an assignment of benefits or rights as an unauthorised payment. There has been concern in the industry that if a member alters the arrangements for determining who receives death benefits under a term assurance policy, such alteration would be caught by this section as an assignmentThe lender taking a charge over the death benefits instead would not be an assignment of the rights to those death benefits so would not be caught by section 172.”

Bright Grey intermediary development director Robin Carr says: “The clarification from the Revenue is very useful. It potentially opens up new sales opportunities for advisers in the PTA market, which is good news.”


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