The non-profit whole-life policy is useful for meeting tax liabilities and is especially useful after the age of 60 has been reached. Over this age the extra premium (50% +) needed to make the policy a participating one may well be too much. And over a short period a with-profit policy is not necessarily a much better investment proposition. As we have already said, life insurance is generally a long-term proposition, and the build-up in value from the younger ages always tends towards the type of line shown in Fig. 3 (p. 50): a slow rate of growth to begin with and a rapid acceleration after about two-thirds of the term. At the older ages the curve is flatter all the way through.
Table 5 Typical annual premium rates per £500,000 sum assured on whole-life policies with premiums payable to age 65.
Age Without profit With-profit
20 70 215
30 100 280
40 165 395
50 330 650
Tax problems often arise in connection with partnerships, where the partner who retires or dies is due to receive a capital sum corresponding to his share in the partnership.
In most cases, providing this out of the current funds or earnings of the partnership is difficult if not impossible, and in an extreme case there may be no alternative to breaking up the partnership to release the money.
Life insurance is a most convenient way of ensuring that such capital sums are readily available.
Apart from the obvious benefit that capital sums provided through insurance... see: Partnerships