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The Money Doctor: Holiday Insurance

Q WE TAKE two holidays a year and a few trips to Old Trafford and London. What is the best way to cover them all? Thanks. John, Glasnevin

HOLIDAY insurance is a must and the great thing about technology is that you have all the answers at your fingertips.

Visit websites of AA travel insurance, Allianz, all the banks, 123.ie, insurancebookers.ie, travelinsurance. ie, getcover.ie, multitrip.com (AXA), and a host more.

To give you just one example, a Gold Cover quotation for a family (two adults, two children aged between two and 17 ) on a worldwide multi-trip for one year would cost €149.

This covers €10m in medical expenses, repatriation expenses, plus €7,000 cancellation cover and €3,000 personal belongings cover.

LIFE COVER WITHIN A PENSION

Q I AM 56 years of age and have waived life cover on my mortgage as it is so expensive. I was told I can get tax relief on the premiums if I put it through my pension. Is this true? Brian, Monkstown

A YES, IT is true. Once you have been Revenue approved, obtaining a Retirement Annuity Contract certificate, you can receive tax relief at your marginal rate — up to a maximum of 41pc while also dependent on the tax-relief thresholds.

The downside is that you cannot assign the policy to a lender as security, so if your bank approves a loan based on your life cover, you cannot use this policy.

There are two types of pension life cover — one for self-employed and the other for employees who pay tax under the PAYE system, are not in a company pension plan and whose employer will not contribute to the plan.

For company pension schemes, there is a double benefit. Firstly, to you, the employee, with tax relief at your marginal rate.

Secondly, to the employer, who, paying the minimum of 10pc of the premium, can write this amount off as a tax deductible cost — there is also no benefit-inkind liability.

However, for the company pension scheme, the maximum life cover is four times your income while for the personal pension holder, there is no limit.

There is, however, a limit to the tax relief obtainable. In your case, at age 56, it is 35pc of your net relevant earnings, so if you are on €50,000, then you can claim up to €17,500 a year in tax relief between any pension contributions and pension life cover.

While it is complicated, it is worth checking out with an authorised advisor.

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