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Arranging Life Insurance To Mitigate Inheritance Tax Risks For A Younger Customer

Arranging Life Insurance To Mitigate Inheritance Tax Risks For A Younger Customer | John Lamb
  • A younger client desired life cover to mitigate a possible £2 million IHT liability
  • The client holds a private pilot’s licence and flies his plane regularly, as well as being an off-piste skier
  • The cost-effective recommendation was for a 65-year term, taking him to age 90

Client’s circumstances

John Lamb Hill Oldridge is proud to be able to assist customers at every stage of their financial journey. In this instance, the client is a 25-year-old man who had been gifted as much as £5 million in non-income producing assets, and who was referred to us by his accountant.

Issues addressed

As the client had other assets that exhausted his nil-rate inheritance tax band, he was liable for inheritance tax at the full rate of 40% on the entire £5 million, which equates to £2 million.

Our team of expert in-house underwriters had to contend with the fact that the client loves to fly his private plane. He is a regular off-piste skier, factors which made finding cover for him a little more difficult.

Tailored solution provided to client by John Lamb Hill Oldridge

The recommendation of the client’s John Lamb Hill Oldridge adviser was that he took out a policy with a term which ran until age 90, and where the sum insured covered the entire potential liability on the gift of £2 million. This meant that the family assets could remain intact were he to pass away, as opposed to a situation where the assets could be severely reduced by a significant tax bill.

After searching the marketplace, our adviser was able to recommend a policy that more than satisfied the young man’s needs.

The premium was fixed and was guaranteed not to change during the term, even though the cover could potentially be in force for as long as 65 years. This meant that the client had the peace of mind of knowing that there would be no sudden changes in the cost of the policy.

The very cost-effective policy also has an indexation option, where the client can decide to increase the policy benefits by a set percentage. Although his premium will also increase if he chooses to do this, this flexible policy allows him to decide every 12 months whether he wants to choose the indexation option or not, all without the need for any further medical underwriting.

Arranging life insurance for the purposes of inheritance tax planning is one of our main areas of focus, so the client made a sound decision in trusting our experts to find the best solution for his circumstances.