US insurance giant AIG Life has revamped its term assurance to help individuals cover their inheritance tax (IHT) liabilities.
AIG said in a statement announcing the move that it was adding the new joint life second death (JLSD) option is a “cost-effective alternative” to the more commonly used whole of life insurance option. The move is significant as a method for couples who plan to gift assets away and erode their IHT liability by a certain age, the company said.
There is also an option which allows policyholders to carve out a ‘gift inter vivos’ plan from the existing sum assured, without the need for further health or lifestyle questions, to cover the reducing IHT liability on any gifts made over the term of the insurance.
“Using life cover for inheritance tax planning is not always as simple as taking out a whole of life policy and then forgetting about it,” said Andy Roberts, Technical Sales Manager at AIG Life.
“Financial advisers proactively help clients reduce their liability over their lifetimes and the developments we are announcing dovetail with that approach.”
Reduced minimum term
At the same time, AIG said that it has reduced the minimum term to two years to meet the needs of individuals investing in business relief-qualifying schemes. These are free of IHT after being held for two years, but are fully liable in the meantime. The two-year term is also available on a JLSD basis for joint applicants.
“Business-relief qualifying schemes are an increasingly popular way to reducean IHT liability, but it is important to remember life cover is still required, even if it is only for a two-year period,” added Roberts.
To view International Investment’s recent Inheritance Tax special ezine, which features a series of interviews, articles and tips from some of the biggest names in the international advisory community on cross-border IHT, click here.