Enquiries about life insurance policies for inheritance tax (IHT) purposes have more than doubled since the Autumn budget when Chancellor Rachel Reeves announced a raft of tax reforms.
The Times says brokers and financial advisers have reported an increase in the number of enquiries for life insurance because it can be put in trust and outside of IHT liability. The insurance broker LifeSearch said that sales of whole life cover were up 230 per cent since the autumn, while other companies have reported similar increases.
“We have seen a huge increase in people asking about using life insurance policies as a cost effective way to mitigate inheritance tax. I would say these are up about 100 per cent.
said Edward Durell from Cover Direct, adding
“There are a lot of positives to these policies because they will immediately pay out and cover that bill, meaning there is no need for beneficiaries to sell property, or get into difficulties paying the taxman.”
The changes had resulted in a doubling of the number of enquiries from customers looking to take out lifetime insurance policies said Mike Strutt from Risk Assured.
“We are encouraging people to get their ducks in a row so that they are ready to roll when they do. We expect there to be a big wave of people taking out policies when the IHT changes come in.”
Given the uproar around changes to agricultural property relief and business property relief life insurance policies are good for businesses and farms whose value is tied up in illiquid assets such as property said Chris Etherington of tax specialist RSM.
‘Many are thinking that as long as the premiums aren’t too excessive, they should probably take out a life insurance policy to meet these IHT bills, which could also cover liabilities from unused pension pots
“More and more people are looking at their pension pots and wondering whether to withdraw funds, but then decide to take out life insurance to cover the potential bill,”
Etherington said. Concluding, Sean McCann of NFU Mutual added more business owners were looking at gift inter vivos policies which he said offered some security for the seven years after gifting, after which it would fall out the estate for IHT purposes anyway.
