Whole Of Life Insurance And Inheritance Tax – What You Should Know

Some individuals have made arrangements to leave funds and property to loved ones in the event they pass away.

These people have added pressure when it comes to choosing the right life insurance policy – not only do they have to plan for loved ones future needs, they also have to make arrangements to guarantee their estate will be protected and passed on to its beneficiaries.

Inheritance Tax is something that many people do not take into account. Luckily, Whole of Life Insurance can help plan for this specific instance.

Inheritance Tax Explained

“Estate” is the term that is used to describe the funds and property left behind by an individual after their passing for one or multiple beneficiaries. The tax that is paid on this estate that equals more than the current nil rate band is called Inheritance Tax.

The nil rate band is set by the government and sets the standard for the number of funds that will be allowed to pass from one generation to another. If the estate is below the nil rate band, not tax will need to be paid – if it is above, Inheritance Tax comes into effect. Currently, Inheritance Tax is payable at 40 per cent on estates that exceed the nil rate band.

How is Whole of Life Insurance Used to Plan for Inheritance Tax?

Out of the many life insurance policies available, Whole of Life Insurance is the only type of coverage that carries a guaranteed lump sum payout whenever the policyholder passes away. Because of this, it is the only policy available that is specifically suited to be used for payment of Inheritance Tax bills. Whole of Life Insurance is not intended for use as a savings account; however, premiums are guaranteed for life and will not change over the life of the policy.



Shifting an Unused Inheritance Tax Threshold

Registered civil partners and married couples are allowed to pass funds and property between each other during their lifetime without being subject to Inheritance Tax bills. This scenario is known as the Spouse or Civil Partner Exemption. Under this exemption, it does not matter how much in assets is passed between the couple as long as the spouse or partner receiving it is a permanent resident of the United Kingdom.

If someone leaves everything to their surviving spouse or partner through this exemption, it means that they have not used any of their Inheritance Tax nil rate band. This unused nil rate band can then be passed to the surviving spouse or partner to help increase the amount that they will be able to pass on to their own beneficiaries in the event of their death, even if the surviving spouse or partner has recommitted themselves to someone else.

Creating a Will

When you are planning to leave an estate for spouses, partners or loved ones, it is important to put into writing how you would like your assets disbursed. This is called a Will. A Will is a legally binding document that will help beneficiaries receive the funds and properties they were promised when a loves one passes away. Without a Will, those who should benefit from the estate may be unable to, so it is important to plan ahead.

Using Gifts to Decrease the Value of an Estate

Another way to avoid falling under the Inheritance Tax rule is by decreasing the value of the estate so it falls below the nil rate band. One way to do this is by giving gifts in the form of funds or property to reduce the estates value. It is important to note, however, that gifts can only be given under specific guidelines in order to guarantee that they will remind exempt from the Inheritance Tax rule.

Some exempt gifts include gifts to spouses or partners, gifts under £3,000 per tax year, charitable gifts and wedding or civil partnership gifts up to £5,000 in certain circumstances.



For those individuals planning to leave loved ones an estate, it is important to get all the information available on different policies, such as the Inheritance Tax rule. Having this information is crucial in making sure your estate remains protected as well as providing the life insurance coverage needed by you and your family.

Proper planning will help alleviate some of the stresses that come with dealing with an estate and making sure spouses and loved ones will be cared for after the insured has passed.

Does Claybrooke Life Cover offer Life Insurance?

Yes, Claybrooke Life Cover does life insurance at £6.96 per month for £242000 of cover.

Do Claybrooke Life Cover offer Life Cover?

Yes, Claybrooke Life Cover life cover is £13.21 per month for £224000 of cover.

Does Claybrooke Life Cover do Life insurance over 50?

Yes, Claybrooke Life Cover Life insurance over 50 is £7.12 per month for £238000 of cover.

Does Claybrooke Life Cover offer Income protection insurance?

Yes, Claybrooke Life Cover Income protection insurance is £6.61 per month.

Does Claybrooke Life Cover do mortgage life insurance?

Yes, Claybrooke Life Cover mortgage life insurance is £10.02 per month for £283000 of cover.

What are Claybrooke Life Cover rates for critical illness cover?

Claybrooke Life Cover rates for critical illness cover is £9.65 per month for £220000 of cover.

Does Claybrooke Life Cover have excellent reviews for life insurance?

Yes, Claybrooke Life Cover reviews are commendable for life insurance.

Does the Claybrooke Life Cover life insurance calculator show the monthly costs?

Yes, the Claybrooke Life Cover life insurance calculator shows excellent monthly costs.

Does a Claybrooke Life Cover life insurance advisor charge a large fee?

No, Claybrooke Life Cover life insurance advisors are free.

Does Claybrooke Life Cover do whole of life insurance?

Yes, Claybrooke Life Cover Whole Life Insurance is £6.54 per month for £257000 of cover.

Does Claybrooke Life Cover do Joint life insurance?

Yes, Claybrooke Life Cover Joint life insurance is £7.58 per month for £217000 of cover.

Does Claybrooke Life Cover do Terminal illness cover?

Yes, Claybrooke Life Cover Terminal illness cover is £10.47 per month for £298000 of cover.

Does Claybrooke Life Cover do Term life insurance?

Yes, Claybrooke Life Cover Term life insurance is £9.82 per month for £291000 of cover.

Does Claybrooke Life Cover offer Decreasing term life insurance?

Yes, Claybrooke Life Cover does decreasing term life insurance at £9.17 per month for £230000 of cover.

Does Claybrooke Life Cover offer Increasing term life insurance?

Yes, Claybrooke Life Cover does increasing term life insurance at £7.52 per month for £201000 of cover.

Does Claybrooke Life Cover offer Level term life insurance?

Yes, Claybrooke Life Cover does level term life insurance at £8.29 per month for £292000 of cover.

Does Claybrooke Life Cover offer Family income benefit life insurance?

Yes, Claybrooke Life Cover does family income benefit life insurance at £9.23 per month for £218000 of cover.

 

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