AIG Life adapts term assurance for IHT planning

AIG Life has enhanced term assurance to help policyholders cover inheritance tax (IHT) liabilities, writes Adam Saville.

AIG Life has enhanced term assurance to help policyholders cover inheritance tax (IHT) liabilities.

The addition of a new joint life second death (JLSD) option provides an alternative to whole of life insurance for couples who want to gift assets and erode their IHT liability by a certain age.

A ‘gift inter vivos’ plan to cover reducing IHT liability on any gifts made over the term of the insurance can also be taken from the existing sum assured by policyholders, without the need for further underwriting.

“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 today dovetail with that approach.”

Minimum term

To meet the needs of individuals investing in business relief-qualifying schemes, which are free of IHT after being held for two years but fully liable in the meantime, AIG Life has reduced the minimum term to two years. This is also available on a JLSD basis for joint applicants.

“Business relief-qualifying schemes are an increasingly popular way to reduce an 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.

Anna Graham, chief pricing actuary (intermediary), added: “People who do inheritance tax planning have a right to affordable life insurance because they are doing something positive to benefit their families and loved ones. We have worked hard to keep the customer in mind when pricing these new term assurance options.”