Using life insurance to pay inheritance tax is too expensive
January 8, 2008 by admin
Filed under News, News-Insurance
Attempting to use life insurance to cover inheritance tax (IHT) bills is risky and expensive, according to financial experts. 
Calculis said that the type of IHT the company offers is all about preserving an estate while, with life insurance, a premium is paid to take advantage of benefits.
Alex Pegley, director for Calculis, said: “If you can, through the use of trusts and specific types of investments actually reduce the inheritance tax bill, why use life insurance?
He added: “I don’t like life insurance for inheritance tax planning; it’s just pouring money down the drain.”
Mr Pegley also stated that the “nature of life insurance contracts” is that as one gets older and closer to needing to claim on them, the premiums go up.
Inheritance tax is paid on death at 40 per cent on all individual estates worth more than £300,000.
On 9 October 2007 the Chancellor of the Exchequer Alistair Darling raised the tax-free threshold to £600,000 for spouses and civil partners.
