I have a Mortgage and when setting it up the Bank did not require Mortgage Protection Insurance. However I took out a Life Policy of equivalent value.
It is currently payable to my partner on my death. The idea being she would use it to pay off the Mortgage.
Problem is, as my Partner, she has little tax relief on anything she inherits from me. The taxman might take more than half the insurance money from her, which would leave her unable to clear the mortgage.
An alternative might be to 'assign' the life policy to the lender, so in event of my death the cash would go directly to the bank.
Question is - would that improve matters? Would the payout still be taxed at the same rate? Would the bank still be left with a shortfall, and then come looking for the balance?
Are Mortgage Protection Policies written in a different way from Life Policies? Do the have tax exemption or what?
It is currently payable to my partner on my death. The idea being she would use it to pay off the Mortgage.
Problem is, as my Partner, she has little tax relief on anything she inherits from me. The taxman might take more than half the insurance money from her, which would leave her unable to clear the mortgage.
An alternative might be to 'assign' the life policy to the lender, so in event of my death the cash would go directly to the bank.
Question is - would that improve matters? Would the payout still be taxed at the same rate? Would the bank still be left with a shortfall, and then come looking for the balance?
Are Mortgage Protection Policies written in a different way from Life Policies? Do the have tax exemption or what?
