Share this page:
Stay connected:
Welcome to the Citywire Money Forums, where members share investment ideas and discuss everything to do with their money.

You'll need to log in or set up an account to start new discussions or reply to existing ones. See you inside!



Insurance for inheritance tax
H Williams
Posted: 02 February 2018 12:06:13(UTC)

Joined: 02/02/2018(UTC)
Posts: 1

Does anyone have any advice for life insurance regarding inheritance tax planning?

Is it possible to take out a policy to cover your tax liability?

I know its a little expensive, but seems like a good way to keep the estate in tact.

Also any advise on brokers? I have found these to be the cheapest so far:

Many thanks in advance.
philip gosling
Posted: 02 February 2018 14:07:45(UTC)

Joined: 06/01/2013(UTC)
Posts: 153

Thanks: 35 times
Was thanked: 199 time(s) in 96 post(s)

You could take out Whole of Life policy, put it into 'trust" with the insurance company by writing who you would want the trustees to pay the money out to - thus stopping the insurance money being counted as part of your estate for Inheritance tax. That is a guarantee to pay out for you or with second death you and a partner but it is expensive insurance. Or you could 'gamble' and pay a lot less maybe only 20% of the premium by going for say 30-40 years life insurance so you/partner would have to die in that period for any payout. you would need to be around 39 or so for this to save a lot in monthly /annual premium. Initially just google life insurance and then examine whole of life or fixed number of years to get an idea of the prices. Also need to work out how much Inheritance tax your estate would be liable for - 40% tax after allowances If you have a large estate well over 1-2 million you maybe need advice from a wealth management firm not just an insurance broker - but they are expensive. My wife and I used Legal & General for a whole of life second Death Policy. My son used Aviva for a 40 year life insurance on himself. Good luck. Do not go for cheapest because you want them to be around in 30-40 years to pay out!
2 users thanked philip gosling for this post.
RBLEZ on 02/02/2018(UTC), Guest on 03/02/2018(UTC)
Money Spider
Posted: 02 February 2018 23:49:35(UTC)

Joined: 11/01/2013(UTC)
Posts: 123

Thanks: 52 times
Was thanked: 254 time(s) in 87 post(s)
If you are worried about IHT then I think that you need a much broader IHT mitigation strategy. Assuming that you are talking about your own estate, it will depend (amongst other things) upon:
  • Your age and health/life expectancy.
    Your outgoings and pension provision.
    Your income.

You can consider:
  • Discretional trusts and discounted gift trusts
    investments that qualify for BPR (Business Property Relief)
    Annual Exempt Gifts
    Gifts from Income
    Potentially Exempt Gifts

If you haven't already figured this out (and you probably have) IHT is multi-dimensional. There are many actions that you can take to mitigate it, but you need to get informed and plan with sufficient time to implement your plan.
Alan Selwood
Posted: 03 February 2018 00:33:36(UTC)

Joined: 17/12/2011(UTC)
Posts: 2,735

Thanks: 561 times
Was thanked: 4570 time(s) in 1643 post(s)
A good estate planning firm of solicitors will probably be more unbiased and cheaper than a wealth manager, IMHO.
+ Reply to discussion


Other markets