Malcolm Finney looks at cost-effective term assurance inheritance tax solutions.
When seeking to mitigate inheritance tax (IHT) liabilities, whether on death or lifetime gifting, the possible role of insurance is often overlooked.
The available insurance policies will invariably rank as qualifying policies (which exclude the prevalent single premium life policies) for tax purposes; consequently, any policy proceeds will not be subject to income tax or capital gains tax (ICTA 1988, s 267; ITA 2007, s 989). However, where such proceeds are paid into a deceased policyholder’s estate, such proceeds will be chargeable to IHT (but see below).
Term assurance is a pure life policy
Term assurance is a relatively cheap form of insurance, primarily because the policy will not pay out except on the death of the life assured; hence, if the life assured survives the
