A working library of UK personal finance.

Term life insurance is the most widely held type of cover in the UK and the cheapest way to put a significant lump sum behind your family. You choose a sum assured and a term — commonly aligned to a mortgage or until your youngest child is financially independent — and your premiums stay level for the life of the policy. If you die during the term, the insurer pays out the agreed amount. If you don’t, the policy simply ends.

It’s most useful for anyone with dependants, a mortgage, or a household that would struggle financially without them. Even single people with shared liabilities or business interests often have a clear case for it.

• Level term vs decreasing term — decreasing matches a repayment mortgage and is cheaper, level matches family income.
• Writing the policy in trust — almost always the right move, and it keeps the payout outside your estate for IHT.
• Joint life vs two single policies — single policies usually give better value and more flexibility for couples.
• Locking in cover while young and healthy — premiums rise sharply with age and medical history.

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Unlike term assurance, whole of life policies have no end date — they pay out whenever you die, provided premiums are maintained. That makes them substantially more expensive than term cover, but it also makes them powerful for inheritance tax (IHT) planning: the policy is sized to cover the expected IHT bill on your estate and, written in trust, the payout reaches your beneficiaries outside the estate and can be used to settle the tax.

Whole of life is most useful for clients with estates likely to face a meaningful IHT bill — typically over the combined £500,000 individual allowance, or £1m for a married couple leaving the family home to direct descendants.

• Guaranteed premium vs reviewable premium — reviewable starts cheaper but can rise sharply later in life.
• Sum assured should reflect a realistic projection of your estate at death, not its value today.
• Always written in trust for IHT cases.
• Coordinated with gifting and other estate-planning steps — it’s a tool, not a substitute for a plan.

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Mortgage protection is a specific application of term assurance. The sum assured is set to the size of the mortgage, and the term runs alongside the mortgage term, so the cover is in place for exactly the period the debt exists. If you die during the term, the policy pays out enough to clear the outstanding balance — meaning the family keeps the home, free of the mortgage.

For repayment mortgages, a decreasing term policy is the natural fit: the sum assured falls each year in step with the reducing balance, and premiums are meaningfully cheaper than equivalent level cover. For interest-only mortgages, where the capital balance doesn’t reduce, a level term policy is usually used instead. Many policies bundle critical illness cover alongside, paying out on serious diagnosis as well as on death.

• Decreasing term suits repayment mortgages; level term suits interest-only mortgages.
• Adding critical illness cover adds cost but pays out on a serious diagnosis as well as on death.
• Written in trust so the payout passes outside the estate and reaches the beneficiaries quickly.
• Reviewed at every remortgage — the cover should follow the mortgage, not the lender.
• Cheaper to lock in while young and healthy — premiums rise sharply with age and medical history.

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Critical illness cover pays a tax-free lump sum on the diagnosis of a specified condition. The list of covered conditions varies by insurer but typically includes the major cancers, heart attack, stroke, multiple sclerosis, kidney failure and several others. The intention is to give you financial breathing room — to pay off a mortgage, adapt a home, fund private treatment, or simply replace income while you recover — without having to draw on long-term savings.

It’s often bundled with life insurance, but the underwriting and definitions matter enormously. Two policies marketed under the same name can pay out very differently for the same condition.

• Number of conditions covered varies widely — quality of definitions matters more than the headline count.
• Children’s cover is usually included — review it; many parents don’t realise.
• Severity-based payouts (partial payments) can be a meaningful upgrade.
• Combined critical illness + life can be cheaper than two standalone policies, but reduces flexibility.

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Income protection pays a monthly, tax-free benefit if you’re medically unable to work. Unlike critical illness, it isn’t tied to a specific list of conditions — it’s triggered by your inability to perform your occupation. Modern policies commonly cover up to 60-65% of gross income, after a chosen waiting period (or “deferred period”) that aligns with any employer sick pay you might already have.

For self-employed people, contractors and directors of small companies it’s often the single most important policy to hold — statutory sick pay alone is a fraction of any meaningful household income.

• “Own occupation” vs “suited occupation” definitions — own occupation is the gold standard.
• Deferred period (1, 3, 6 or 12 months) directly affects premium — align it with any employer sick pay.
• Long-term vs short-term cover — cheap two-year cover often masks how serious long-term illness really is.
• Index-linked benefit to keep pace with inflation.

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Private Medical Insurance (PMI) is an annual policy that funds private healthcare — specialist consultations, diagnostics, surgery and hospital stays — outside the NHS. The product has expanded considerably in recent years as NHS waiting lists have grown, with policies now widely held by households and offered as a standard benefit by larger employers.

Cover and price depend on the chosen hospital network, the level of outpatient cover, whether mental health and full cancer cover are included, and the underwriting basis (moratorium vs full medical). Premiums change each year with age, medical history and recent claims, which makes the long-term shape of a household’s PMI cost very different from a fixed-premium life policy.

For business owners and directors, PMI is commonly arranged through the company — either as a personal benefit (reportable on the P11D as a taxable benefit-in-kind) or as a group scheme covering multiple employees. The right structure depends on company size, headcount, and how the cost stacks up against the equivalent personal premium.

• Moratorium underwriting (cheaper, with pre-existing conditions excluded for an initial period) vs full medical underwriting (declared up-front).
• Outpatient cover, mental health and cancer cover vary widely between policies — the headline premium hides a lot.
• Excesses and co-insurance can reduce premium meaningfully for healthy households.
• Company-paid PMI is usually a P11D taxable benefit — modelling matters before signing up.
• Premiums change each year with age and claims — long-term affordability is part of the decision.

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Business protection is a family of cover designed specifically for limited companies and partnerships. Key person cover pays the company a lump sum if a critical employee or director dies or becomes seriously ill — replacing lost profit, funding a recruitment process, or steadying lenders. Shareholder protection funds the surviving shareholders to buy the deceased’s shares back from their estate, keeping control of the business in the right hands. Relevant life cover is a tax-efficient way for a company to provide death-in-service cover for a director, written as a corporate expense rather than a personal premium.

For most small and medium-sized businesses, these policies are conspicuously absent — even where the personal van is insured without question.

• Companies need a properly drafted cross-option (or buy-sell) agreement alongside shareholder cover.
• Relevant life can be more tax-efficient than personal term cover for higher-rate director-shareholders.
• Sum assured for key person should reflect lost profit + replacement cost, not just salary.
• Premiums for relevant life are typically a deductible business expense.

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Auto-enrolment requires UK employers to offer a workplace pension to most employees and pay a minimum contribution alongside them — currently 3% from the employer and 5% from the employee (which includes 1% tax relief). Many employers will match higher employee contributions, often up to 5–8%, which is some of the best value money you’ll ever encounter.

The default investment fund is usually a one-size-fits-all option that may not match your time horizon or risk tolerance. Quietly reviewing the fund choice and contribution level can have an outsized effect on retirement outcomes.

• Are you capturing every penny of employer match? Anything less is leaving free money behind.
• Default fund vs self-selected — for younger savers the default is often too cautious.
• Salary sacrifice can save both income tax and National Insurance.
• Old workplace pensions from past jobs may benefit from consolidation.

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A SIPP (Self-Invested Personal Pension) is a personal pension that gives you control over what you hold inside it — funds, ETFs, individual shares, commercial property and more, depending on the provider. The tax treatment is the same as any UK pension: contributions attract tax relief at your marginal rate, growth is sheltered from income and capital gains tax, and 25% can usually be taken tax-free from age 55 (rising to 57).

For the self-employed, a SIPP is often the main retirement vehicle. For employees, it’s commonly used to consolidate old workplace pots or to supplement workplace contributions.

• Annual allowance: £60,000 (subject to tapering for very high earners and the money purchase annual allowance).
• Carry-forward: unused allowance from the previous three tax years can be brought into the current year.
• Platform and fund fees vary widely — small percentages compound to large numbers.
• Consolidating old pensions can simplify, but final salary / DB pensions need very careful analysis.

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A Junior SIPP (JSIPP) is a Self-Invested Personal Pension opened in the name of a child under 18, managed by a parent or legal guardian until the child takes operational control at 18. Contributions are limited to £2,880 per tax year per child net, and HMRC adds 20% basic-rate tax relief on top — so a maxed contribution becomes £3,600 gross going into the pension annually. Anyone — parent, grandparent, family friend — can contribute within that cap.

The case for the JSIPP is compounding time. £3,600 contributed every year from birth until 18 — £64,800 of contributions including £12,960 of tax relief — then left to grow inside the pension for four or five more decades, often becomes a transformative sum by the child’s eventual retirement. For grandparents in particular, the JSIPP doubles as an estate-planning tool: pension assets currently sit outside the estate for inheritance tax (a rule which has been signposted for possible reform).

The trade-off is access. JSIPP money is locked away until standard pension age — currently 55, rising to 57 in 2028 — with no early-access route for university, a deposit, or anything else. For families who already use the Junior ISA allowance for shorter-horizon goals, the JSIPP fits alongside as the genuinely long-term wrapper.

• Money is genuinely locked until pension age — there is no early-access route.
• Investment choice sits with the parent or guardian — typically a low-cost global equity fund over a multi-decade horizon.
• Sits alongside the Junior ISA, not instead of it — they cover different horizons.
• Grandparents’ contributions can fall within the seven-year IHT gifting rule or the “regular gifts out of surplus income” exemption.
• Child takes operational control at 18 — but cannot withdraw until pension age.

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For limited company directors, pension contributions made by the company are usually treated as a deductible business expense — saving corporation tax — while bypassing income tax, dividend tax and National Insurance entirely on the way in. That makes director pension contributions one of the single most tax-efficient ways of moving money from company to personal balance sheet.

A SSAS (Small Self-Administered Scheme) goes a step further: it’s a pension scheme established by the company itself, and can lend money back to the sponsoring business or invest in its commercial property. Powerful, but complex — and not the right answer for every director.

• Employer contributions must satisfy the “wholly and exclusively for the trade” test for corporation tax deductibility.
• SSAS loan-backs can keep working capital in the business while building pension assets.
• Group structures, family members on payroll and accumulation strategies all benefit from holistic planning.
• Drawdown strategy matters as much as accumulation — how you take money out is a key planning lever.

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An annuity is a contract with an insurer: you hand over a lump sum (usually from a pension) and they pay you a guaranteed income for life or for a fixed term. The income depends on your age, health, current interest rates and the options you choose — spouse’s pension, inflation linking, guaranteed periods.

After more than a decade out of favour, higher interest rates have made annuity rates substantially more competitive again. For retirees who value certainty of income over flexibility — particularly to cover essential living costs — they’re back on the table.

• Once bought, an annuity can’t be undone — shop the open market hard.
• Enhanced annuities for health conditions can pay significantly more.
• Joint-life vs single-life is one of the most important choices.
• Inflation-linked vs level income changes the shape of retirement dramatically.

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Drawdown leaves your pension pot invested and lets you take income (and lump sums) on your terms, rather than locking into an annuity. You can usually take 25% tax-free overall, and the rest is taxed as income as you draw it. The flexibility is the appeal — you can adjust withdrawals year to year, leave residual value to beneficiaries, and stay invested in markets through retirement.

The flip side: investment risk and longevity risk now sit with you. Drawing too aggressively in a poor market early in retirement (“sequence risk”) can permanently damage the pot.

• Safe withdrawal rates are a starting point, not a destination — flexibility is the real edge.
• Tax planning around income tax bands matters every year, not just at the start.
• Underlying investment mix needs to evolve as you draw down.
• Death benefits and beneficiary nominations are a separate, important conversation.

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UK income tax is layered: a personal allowance, then 20% basic-rate, 40% higher-rate and 45% additional-rate bands sit on top. Beyond the bands themselves, there are several allowances that work alongside — the personal savings allowance (which shelters some bank interest), the dividend allowance, and the marriage allowance for couples where one earns below the personal allowance threshold.

Crucially, the personal allowance tapers away once income exceeds £100,000, creating an effective marginal rate of 60% in a narrow band. Recognising and managing this band is one of the highest-impact pieces of personal tax planning available to higher earners.

• The £100k personal allowance taper — pension contributions are the standard escape.
• Spousal income splitting can balance allowances and bands.
• Salary sacrifice (pension, EV, cycle to work) reduces taxable income before it hits the bands.
• Director pay mix — salary vs dividends vs pension — needs annual review.

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Capital Gains Tax (CGT) applies when you sell something that has gone up in value — investments held outside a tax wrapper, second homes and buy-to-lets, business interests, valuable possessions. The annual exempt amount — the gain you can realise tax-free each year — has been cut to £3,000, sharply down from £12,300 only a few years ago.

That makes year-by-year management of taxable gains substantially more important. Bed & ISA, spousal transfers, harvesting gains within the allowance, and timing of disposals across tax years are now standard practice for any meaningful portfolio outside a wrapper.

• Annual exempt amount £3,000 — use it or lose it.
• Transfers between spouses are no-gain-no-loss — can double the effective allowance.
• Different rates apply to property gains vs other gains.
• Business Asset Disposal Relief can reduce CGT on qualifying sales.

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Inheritance Tax (IHT) applies at 40% to the value of an estate above the available nil-rate bands. Each individual has a £325,000 nil-rate band, plus a residence nil-rate band of up to £175,000 where a home is left to direct descendants. Unused bands transfer between spouses, so a married couple can in many cases pass up to £1m between them before IHT applies.

Estate planning works in layers — lifetime gifting, trusts, business and agricultural reliefs, life cover written in trust, and pension structures all play a part. Done well over years, very large estates can be passed on with very little IHT. Left to the last minute, options narrow sharply.

• Seven-year gifting rule — the clock starts the day the gift is made.
• Residence nil-rate band tapers for estates over £2m.
• Pensions can sit outside the estate — an important structural point.
• Life cover in trust can pay the bill without inflating the estate further.

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A will sets out how your estate is distributed after death and names guardians for any minor children. Without one, your estate falls under intestacy rules, which rarely produce the outcome people actually want — particularly for unmarried partners and blended families.

A Lasting Power of Attorney (LPA) appoints people to make decisions on your behalf if you lose the mental capacity to make them yourself. There are two types — one for property & financial affairs, one for health & welfare — and both have to be set up while you still have capacity. People often associate LPAs with old age, but accident or sudden illness can make them necessary at any point.

• Wills should be reviewed after marriage, divorce, children and major asset changes.
• Both types of LPA matter — they cover different things.
• Set up while well — LPAs cannot be made after capacity is lost.
• Coordinated with the rest of the estate plan, not done in isolation.

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A trust separates the legal ownership of an asset from the people who benefit from it. The trustees hold and manage the asset; the beneficiaries get the benefit, on the terms the trust deed sets out. UK trusts come in several forms — bare, interest in possession, discretionary, accumulation — each with its own tax treatment.

Trusts are most commonly used to keep life insurance payouts outside the estate, to protect a vulnerable beneficiary, to control when (and to whom) inheritances pass, and as part of structured IHT planning. They’re powerful, but they aren’t the right answer for every situation, and they require careful drafting and ongoing administration.

• Discretionary trusts give trustees control — useful for blended families.
• Life insurance in trust is the most common, lowest-effort use case.
• Ten-year periodic charges apply to certain trusts — ongoing admin is real.
• Coordinated with wills, pensions and life cover, not done in isolation.

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