Endowment policies have had a bad press because of high costs and lack of transparency, but newer-generation ones are more transparent and have lower costs, so it is worthwhile taking another look at them. The advantages • If the endowment policy has a life assured (a person on whose death the invested amount is paid), it is possible to add a beneficiary. This has the advantage that on the death of the life assured, the policy pays directly to the beneficiary. This means that, although the policy is still an asset in the estate for estate duty purposes, the proceeds do not physically form part of the estate, and therefore avoid executor's fees. The proceeds can also pay out immediately to beneficiaries and avoid the delay of having to be wound up with the rest of the estate assets. • Assuming you, as a natural person, own the policy, the life assurer through its policyholder fund will apply the following fixed tax rates: 30% on any income earned and 12% on any capital gains made. Th...

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