Bright Grey is urging brokers to make sure their clients know that if they let a pensions term assurance policy with tax relief lapse, they will not be able to reinstate it on the same basis.
The deadline for PTA pipeline business transacted before HM Revenue & Customs removed tax relief last December passed on July 31 and Bright Grey technical product manager Ian Smart says most customers will not know this until their policy has already lapsed, which generally happens if they miss a single premium.
He adds policyholders who reinstate their PTA policies will essentially be paying expensive premiums for ordinary life cover.
Smart says: “If a person’s policy lapses, they will probably cancel it and try to find a cheaper life policy. This will lead to more people being unprotected and the industry will get the blame, not the Revenue.”
Highclere Financial Services partner Alan Lakey says: “I think that insurers can stop this happening if they really want to by relaxing the timescales and not being so quick to lapse policies.”
HMRC was unavailable for comment.