You are here: Home - Insurance - News -

Simple life policy oversight costing Brits thousands of pounds

0
Written by: Emma Lunn
20/06/2019
Thousands of beneficiaries of wills are unnecessarily paying inheritance tax (IHT) on life insurance policies.

Life insurance policyholders who fail to complete a simple form are leaving their families with an unnecessary IHT headache, according to NFU Mutual.

Under normal circumstances, the payout from a life insurance policy will form part of an individual’s estate and may be subject to IHT.

However, by writing a life insurance policy in trust – done simply by filling in a form from the insurer –  the proceeds from the policy can be paid directly to beneficiaries rather than an individual’s estate, meaning it will not be taken into account when IHT is calculated, and monies can be paid out quickly by trustees.

Sean McCann, chartered financial planner at NFU Mutual, said: “The prospect of paying inheritance tax on a life insurance policy is all too frequently a nasty surprise for thousands of bereaved families.

“Thankfully, remedying the situation couldn’t be simpler – by contacting their provider and completing a trust form, policyholders can potentially remove the threat of their loved ones facing a costly IHT bill.”

Figures from the Office for National Statistics show about 7,120 life policies worth more than £700m were caught in the IHT trap in 2015/16, with up to £280m paid in unnecessary IHT.

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

ISAs: your back-to-basics guide for 2018/19

Here’s everything you need to know to make the most of your unused ISA allowance ahead of the 5 April deadli...

A guide to Sharia savings accounts

A number of Sharia savings products have upped their game in recent months, beating more familiar competitors ...

Five ways to get on the property ladder without the Bank of Mum and Dad

A report suggests the Bank of Mum and Dad is running low on funds. Fortunately, there are other options for st...

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

Money Tips of the Week

Read previous post:
Gold prices hit a five-year high

After a sluggish start to the year, gold has jumped to a five-year high as a result of heightened US-China...

Close