Pension Term Assurance Payout Query

[bigbustour]

If I have a pension fund worth for example €300k and a pension term assurance policy for €100k and I die with my salary at €40k can someone outline the payout flow to my spouse.
I understand its a max of 4 times salary payable to spouse with balance via an annuity.

Does it work by adding the €100k life cover to the €300k and giving spouse €160k(4 times salary) and balance of 240k into annuity..
..or is it €100k to spouse from life policy, €160k from 4 time's salary and €140k via annuity.

Thanks

 

[Steven Barrett]

I presume you are talking about company paid term policies.

You have an accumulative fund value of €400,000 - €160,000 is paid tax free and the remain €240,000 goes into an annuity.

Have you looked at the possibility of transferring the pension fund to a PRSA. On death, the full value of that fund is paid to your estate tax free. The term assurance policy is now only 2.5 times salary, so the full value of the fund is paid tax free too.

...if they are in personally paid funds, the whole whack is paid tax free.


Steven
www.bluewaterfp.ie

 

[bigbustour]

I presume you are talking about company paid term policies.

You have an accumulative fund value of €400,000 - €160,000 is paid tax free and the remain €240,000 goes into an annuity.

Have you looked at the possibility of transferring the pension fund to a PRSA. On death, the full value of that fund is paid to your estate tax free. The term assurance policy is now only 2.5 times salary, so the full value of the fund is paid tax free too.

...if they are in personally paid funds, the whole whack is paid tax free.


Steven
www.bluewaterfp.ie

Thank you for reply, Just to clarify do you mean with no pension balance in the pension you are limited to 2.5 times salary as a pay out

 

[Steven Barrett]

No, the 2.5 times salary is all you will have under the company paid arrangement. You can take out additional pension term assurance to bring the pay out up to 4 times salary if you wish.

You need to get the pension out to a PRSA though. There are restrictions though.

If you have more than 15 years in the scheme, you can't do it.
You may have to have an actuarially report carried out, which costs €1,200 to do. If you can wind up the scheme, you can get around that though.


Steven
www.bluewaterfp.ie