Life Assurance - Help!

Alligator1

I've already asked this on the insurance board but haven't had any responses, hoping you guys can help.

Is it possible/legal to take out life assurance against someone else's life? Or can you only take it on your own?


The reason I'm asking is, my boyfriend and I want to know if it is possible for me to take out life assurance on him, the policy would be in my name and the premiums paid by me, with me as the sole beneficiary, with the funds to be paid in to trust to avoid Inheritance Tax. Does that make any sense?!!

Hope someone can help, thanks

herbiesjp

As long as there is an insurable interest - as in this case there is, yes you can

Alligator1

Thanks for that. What exactly constitues an insurable interest?

Also, any ideas on who is best to insure with? I've seen ads on tv etc for "no medical, guaranteed acceptance" but have also heard about them not paying out.

From what I've read, we want a Whole Of Life policy as we want something that guarantees a particular pay out on death whenever that happens to be.

Have you any idea on how the paying in to trust to avoid IT works?

Thanks

lotto-dreamer

this might help - although wikipedia is not always entirely accurate but it might be a starting point

http://en.wikipedia.org/wiki/Insurable_risk

http://en.wikipedia.org/wiki/Life_insurance

Alligator1

Thanks for that lotto-dreamer;)

herbiesjp

To put it simply - there has to be a link between you and the person you are insuring. So in your case there is that financial link, and the reason for the policy is financial protection for you should he die.

Plenty companies you can look at

All life policies are medically underwritten - depending on what you answer on the application form, the company may accept you as quoted, may ask for a GPs report, may ask you to undergo a medical, and can then accept as quoted, place exclusions on the policy, and/or increase premiums if the applicant is viewed as higher risk.

Most people want term cover i.e. to cover a mortgage term, until children reach a certain age, retirement, as requirements for life cover change throughout a lifespan. Whole of life will be a lot more expensive than normal term assurance

By placing the policy in trust, means that the proceeds get paid immediately on the death of the life assured, to the beneficiaries. They do not form part of the estate of the deceased for IHT purposes and so IHT is not applicable to the proceeds

Alligator1

Thanks herbiesjp. So if it is paid in to trust, does the trust then pay it as a lump sum to the beneficiary? Also, is it possible for anyone else to contest this? Or is it that I've paid for the policy and that's the end of it?

Can PM you more details if need be, is a bit complicated!

lotto-dreamer

I'm on a roll with some 'googling' and found this too

http://www.enhancedwealth.co.uk/news/index.php/2008/07/should-you-put-life-insurance-in-trust/

not sure of the site! But, it seems to put the basics in a nutshell anyway.

Alligator1

Thanks again lotto-dreamer! You are on a roll aren't you! That was really helpful. All this life assurance is totally new to me so want to find out plenty so don't end up buying something that doesn't pay out!

herbiesjp

You would always make sure that the trustees of the trust - are people that you can trust 100% (excuse the pun)

No it is not possible for anyone to contest the trust afaik

It doesn't cost anything to place the policy in trust, it's just a document that you need to complete, stating who you want to be the trustees and who you want to be the beneficiaries

How complicated is the scenario?

Alligator1

I've PM'd you.