Questions of Cash: Can't I get a cheaper quote now I'm well again?

Q.Eight years ago I had Hodgkin's Disease from which I made a complete recovery after six months of chemotherapy. Can I get a more reasonable quote now?


Q. Eight years ago I had Hodgkin's Disease from which I made a complete recovery after six months of chemotherapy. I am 27 and have been clear for over seven years. My consultant thinks I am no more likely than anyone else to get cancer. I have two children and want a life insurance policy. Legal & General and Norwich Union offered me policies at £200 a month for the first five years for cover of £99,000. Premiums for my age group should be £20 a month. Can I get a more reasonable quote?


JS, Gloucestershire

Q. Eight years ago I had Hodgkin's Disease from which I made a complete recovery after six months of chemotherapy. I am 27 and have been clear for over seven years. My consultant thinks I am no more likely than anyone else to get cancer. I have two children and want a life insurance policy. Legal & General and Norwich Union offered me policies at £200 a month for the first five years for cover of £99,000. Premiums for my age group should be £20 a month. Can I get a more reasonable quote?
JS, Gloucestershire

A.Seek guidance from a medical specialist financial adviser or insurance broker. Dr Penny O'Nions, an IFA with the Onion Group and a doctor of medicine, says: "Insurers are reluctant to cover conditions which might return. Fill in a generic application form and a specialist adviser can broker the market on your behalf. Information will be required from your GP, consultant and specialists." Dr O'Nions says it is unrealistic to hope for cover of £99,000 on a £20 monthly premium. But with a policy on a term of three to five years you might get the level of cover you require at a monthly premium of £50 to £100, possibly from a Lloyd's syndicate rather than a large life assurer.

Q. Our daughter is a single parent and mature student. We bought a second property that she lets from us and which she plans to buy when she completes her studies in two years. We would like to regain our deposit and take advantage of the increase in property prices as we will need this money to fund an anticipated shortfall on our endowment policy to pay off the mortgage on our home. We also want to provide our daughter with a deposit and legal fees. How can we achieve this and reduce capital gains tax (CGT) liability? The property has doubled in value from £37,000 two years ago. PB, Manchester

A.Glenn Martin, a tax manager at the accountant Moore Stephens, says: "CGT will be payable on the difference between the sale proceeds and the amount you paid for the property. You will get tax relief for professional expenses such as solicitor's fees. You should ensure that the property is in the joint names of you and your wife, as this enables you each to claim the annual capital gains exemption, currently £8,200. Assuming the property is worth £100,000 in 2006 and in your joint names, the potential capital gain will be about £40,000, split between you and your wife. Tax will be payable at either 20 per cent or 40 per cent, depending on your other income and gains in the year of sale.

Your daughter would have a stamp duty liability of £1,000. To reduce CGT, one of you might elect the second property to be your main residence for tax purposes. You would need to live there for a period as your private residence. The last three years' ownership are then exempt from the charge to tax - potentially 75 per cent of the gain. Alternatively, you and your wife might gift your daughter a 50 per cent share in the property now, with your daughter acquiring the remaining half in two years. The gift is treated as a potentially exempt transfer for Inheritance Tax purposes, which means it will be disregarded if you both survive seven years from the date of the gift. No stamp duty will be payable on this gift. There will be CGT liability on the gift, with two capital gains tax annual exemptions available - the gain after exemptions would then be about £2,100, payable at either 20 per cent or 40 per cent. In two years there would be no stamp duty payable on the half share as this would, presumably, be under £50,000. After repaying your mortgage the CGT on your joint half share would be about £2,250 if you pay tax at basic rate." You should seek your own expert advice.

Q. I am 42, entitled to an ICI Pension with 21 years' service, frozen on leaving the company in 1999. I have a second company pension with five years' service. My divorce settlement has left me £30,000 in debt, I am renting accommodation and have no capital for a new mortgage. I have a good job with a salary of £53,000. I would like to cash in my ICI pension - is this possible? CC, by e-mail

A/No. Simon Creeber, a pensions specialist at the IFA Vale Insurance Services, explains: "In return for pension scheme tax advantages there are strict conditions as to how and when benefits can be taken. A person's pension entitlement cannot be cashed in, but must be used to provide an income.

"Unless you are forced to retire due to ill health, it is not possible to take benefits before age 50. Any payment of benefits before the company scheme's normal retirement age is discretionary and steep benefit reductions would be applied - although you could transfer away from ICI if they refused to allow benefits to be taken." Mr Creeber says you could examine 100 per cent mortgage loans which might enable you to purchase a property of up to £185,000 on your salary.

* If you have questions, write to Questions of Cash, 'The Independent', 191 Marsh Wall, London E14 9RS, or e-mail cash@independent.co.uk We can reply only to letters published. Please send copies, not originals.

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