Funeral & Inheritance Tax Planning

Most of us prefer not to think about what happens after we pass away, but taking care of our loved ones by making sure they don’t face considerable financial costs at a time of loss is a thoughtful act.

Here at Vita we are authorised to provide advice and make recommendations for you – so please get in touch so we can discuss your options and present you with a free Report, detailing advice and quotations for you to consider. Call us on 0800 988 36 37 – or get a quote. In the meantime we’ve put together a summary and some further reading for you:

 

Whole of Life Cover

This policy type has no end date and is used for many reasons including: to leave a guaranteed sum of money to cover an Inheritance Tax bill, pay for funeral expenses, or simply leave a nest-egg for loved ones.

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As the name suggests, this type of insurance provides cover for the duration of your life, rather than for a fixed term. This means that, whenever you die, your loved ones will receive a cash sum no matter what happens.

Examples of the benefits of a Whole of Life policy are:

  • Provide a guaranteed lump-sum to help fund funeral costs
  • Leave a guaranteed lump-sum for loved ones
  • To contribute towards Inheritance Tax

Both the monthly premiums and the cover amount can be fixed so that you know exactly how much you will pay for the duration of the policy and also how much your loved ones will receive in the event of the claim.

You also have the option to increase your cover amount in line with inflation – however your monthly premiums will naturally be increased as a result. Our friendly Advisers are experts, able to answer any question you have and also make recommendations. For free impartial advice and tailored quotes call us now on 0800 988 36 37, or if you’re busy request a call back. We’d love to help you.

Case Study – provisioning for an Inheritance Tax bill

Benjamin Franklin said “In this world nothing can be said to be certain, except death and taxes.” This is exactly where a Whole of Life policy can be helpful – as a cost effective way of paying a future Inheritance Tax bill when you pass away.

As the reader, YOU can assume the role of Mr & Mrs Vita.

Fact: upon death, Inheritance Tax (IHT) is paid on any part of your estate that exceeds the ‘nil-rate band’ – which is currently £325,000 (£650,000 for couples). The rate of IHT is 40%.

Mr & Mrs Vita are both aged 60 and have a house, cash, savings, investment plus a small mortgage balance left on their property. All told, their Estate is currently worth £850,000. When the remaining partner passes away, then their beneficiaries would have to pay 40% on the amount over the nil-rate band, which means an IHT bill of £80,000 – a large sum indeed!

To prevent their two children from having to find the cash and foot the bill, Mr & Mrs Vita decide to take out a ‘Whole of Life’ policy that will pay out the required £80,000 when they have both passed away. The policy costs them £92.09 per month.

The Office of National Statistics states life expectancy for a male is 78 and for a female 82. Let’s assume Mr & Mrs Vita defy the stats and live to age 90. At this stage they would have paid £33,152 – but yet the insurer will pay the insured sum of £80,000.

In fact, Mr & Mrs Vita would have had to live until age 133 in order to have paid in more in premiums than the policy would actually pay out.

The policy is written in Trust, meaning that the proceeds don’t add to the IHT bill, nor are they held up in Probate, so the money can be paid directly from the insurer to the named beneficiaries, quickly.

This policy isn’t about generating a profit, but based on the amount of money you are likely to pay the insurer and the amount the insurer will pay out, the proposed Whole of Life Cover policy is, in our opinion, fantastic value!

Over 50s Life Cover (Guaranteed Acceptance)

Also a form of ‘Whole of Life Cover’, typically better value for people with pre-existing medical conditions. It’s a quick and simple way of arranging Life Cover without any medical questions, helping to cover funeral costs, unpaid bills or leave a legacy for loved one.

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Over-50s Plans are a popular way to provide a cash lump sum to help with funeral costs, unpaid bills or leave a gift for grandchildren or loved ones.

  • Guaranteed acceptance for anyone aged 50 to 80
  • No medical questions to answer
  • Guaranteed pay out whenever you pass away (no end date to the policy)
  • Affordable low-cost premiums

Few of us like to think about what happens after we pass away, but taking care of loved ones by making sure they don’t shoulder a financial burden at a time of loss is a thoughtful act.

Over-50s policies leave your family a cash amount, from £500 up to £36,000, or even more. If you are in good health then you can apply for Whole of Life Cover, where there is no limit on the amount of cover you can have and the premiums may work out cheaper.

The cost of dying in 2015, taking into account the costs of a funeral and estate administration, was an average of £8,126.

*Sun Life Direct Cost of Dying Survey, 2015

You may have seen daytime adverts with the likeable Sir Michael Parkinson offering a free Parker pen or alarm clock, but don’t be hooked in by his caring voice or the freebies! The amount of cover you can get for your premium can vary drastically from insurer to insurer – so let us search the market and get you the best deal.

To speak with one of our friendly Advisers, who will be happy to discuss your options and provide you with a quote from one of the UK’s leading insurers, please call us on 0800 988 36 37 or get a quote.

Gift Inter Vivos

A special type of Life Insurance, designed specifically to match the Inheritance Tax (IHT) liability on gifts you make that HMRC could consider a Potentially Exempt Transfer (PET).

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If you gift assets away to loved ones other than a spouse, there’s a risk that if you die within 7 years that you will leave behind a large tax bill. To make it worse, the tax man will be collecting from the people who received the gift rather than from your estate. The tax bill could be difficult to pay, especially if the gift is something tangible, such as property.

Gift Inter Vivos is a special type of Life Insurance, designed specifically to match the Inheritance Tax (IHT) liability on gifts you make that HMRC could consider a Potentially Exempt Transfer (PET).

The policy lasts for seven years and the amount of cover will decrease in line with the IHT liability on the gift you have made. If you die within the policy term, the cover amount will be paid to your beneficiaries as a tax-free lump sum, which they can use to cover any remaining IHT liability on your gift.

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To speak with one of our friendly Advisers, who will be happy to discuss your Gift Inter Vivos options and provide you with a quote from one of the UK’s leading insurers, please call us on 0800 988 36 37 or if you’re busy request a call back.

 

 

*Please note that whilst we can provide advice and make recommendations in relation to the Life Insurance, we are not tax experts nor are we qualified to give specific advice on Inheritance Tax.