Since Self Investment Personal Pensions can be a legitimate way to save for the future, a common way for consumers to view these plans is as a replacement to a standard life insurance policy. Since the concepts between a SIPP and a life insurance policy are very similar, it is important for a person to decide for themselves whether one or both of these options is best for their specific needs.
Most life insurance policies will require an invested amount to be eligible for an allotment to be given to a beneficiary upon unfortunate circumstances. Since the monetary amount is often larger than the amount paid to the life insurance agencies, the benefits can be considered as a higher return, but with no access to these funds during the lifetime of a person. If you consider the possibility of an untimely demise very likely due to a dangerous lifestyle or career choice and expect to not make it to retirement age, life insurance policies would be advisable for your circumstance.
The benefits of a SIPP over life insurance can be estimated by the amount of time a particular person figures he or she will survive. Since the amounts of a life insurance policy do not increase over time, the benefits of a long term pension plan will improve the longer a person devotes funds to their retirement account. There are no specific health requirements that would affect the eligibility or the end payout of a recipient for a pension plan, which can be more desirable for people with long-term health conditions that are not lethal.
For some high income workers, the amount of Self Investment Personal Pensions can be limited by a certain cap. This means that any funds after a certain point invested would be taxable and would not yield the same benefits that the funds before this cap would infer. Having both a SIPP and a life insurance policy would increase the total amounts that could be used for the time spent in retirement and the funds inherited by the beneficiary.