Life Assurance in Trust

jcumpsty

I have finally managed to arrange life insurance, after obtaining several quotes over the past year. What put me off was the paperwork that I had to download from Cavendish Online. Fortunatly using the best buy article on MoneySavingExpert.com, I would up with a policy from HomeCall+, that is 55p per month cheaper than Cavendish.

I know Inheritence tax is taken above £265k, which the house already puts me over.

My dependants are my wife, and children 4,5 and 20.

How should I best arrange the trust to avoid inheritance tax?
Is it possible to avoid all tax on the life assurance money?

Personally, I dont think it is fair to charge tax on the lifa assurance funds. After-all I hve already paid tax on the money used to buy the insurance. But that is gov'ts for you.

dunstonh

IHT threshold is 285k and 300k from April.

How should I best arrange the trust to avoid inheritance tax?

Depends on your circumstances. Some insurers have pre-written trust documents to fit most requirements. Others dont. Some people would require solicitor drawn up trust documents. Most would be fine with the standard trust docs though.

Is it possible to avoid all tax on the life assurance money?

There is no tax on life assurance.

Personally, I dont think it is fair to charge tax on the lifa assurance funds. After-all I hve already paid tax on the money used to buy the insurance. But that is gov'ts for you.

As I said, they dont charge tax on life assurance. It is charged on the value of your estate in the form of inheritance tax. If you are silly enough to have your life assurance paid into your estate then you deserve to have IHT taken from it. It only takes a small bit of paperwork to have the proceeds paid outside of the estate to the nominated beneficiaries.

BTW, I cant find any reference to homecall+ life assurance. It all seems boiler related etc. Were the premiums reviewable or guaranteed? Was it full term assurance or yearly renewable term assurance? What was the terminal illness cover like? What guaranteed insurability options does it have compared to the mainstream providers?

jcumpsty

So, if I leave my wife as the sole beneficiary to the trust, she will get the whole amount free of tax?

The amount in question is £400k. It seems unbeleiveable that the IR would let her be given tat much money without trying to take a chunk.

Homecall+, does specialize in boiler insurance.

They are listed in the Insurance best buy article on this web-site as https://www.life-insurance-online.co.uk.

The insurance itself is through Legal & General, with free TIC, and guaranteed premiums for 30 years. I compared the quote side by side with the one from Cavendish Online. They where exactly the same bar 55p per month difference. Plus Homecall+ took my application over the phone instead of making me fill in all the documentation (which was the real benefit).

dunstonh

So, if I leave my wife as the sole beneficiary to the trust, she will get the whole amount free of tax?

There is no IHT to pay between spouses. The issue of IHT comes when it goes to the children.

The amount in question is £400k. It seems unbeleiveable that the IR would let her be given tat much money without trying to take a chunk.

No problem as above. However, you could write the life policy in trust to the children (at least the family element of it) to save any future liability occuring on second death.

The insurance itself is through Legal & General

They are fine.

jcumpsty

Can someone please advise me where I stand?

I have just been called by Rebecca at Homecare+ (aka https://www.life-insurance-online.co.uk).

Apparently due to my height and weight ratio the premium has gone up to £40.19. I am 5'10" and 220lbs.

So the premium has gone up by 50%. I have said to cancel the application for now, but was told that I would lose my £35 admin fee.

Shouldn't they confirm health issues before they issue a quotation?

What annoys me the most is I work out with weights, so while I may be chunky (my wife calls me cuddly), I am not obese.

dunstonh

Shouldn't they confirm health issues before they issue a quotation?

Quotes are based on standard health and often class 1 occuptations. Its been like this since the year dot. It is not possible to do it any other way as you wouldnt know who is the cheapest until after you have submitted a full application if you want to do it your way. So, who would you use if you didnt know a price beforehand.

What annoys me the most is I work out with weights, so while I may be chunky (my wife calls me cuddly), I am not obese.

Your height weight ratio is the issue and has put you into a higher risk group. The decision is from L&G who are the product provider.

So the premium has gone up by 50%. I have said to cancel the application for now, but was told that I would lose my £35 admin fee.

Expect all insurers to treat you the same way and of course if you do apply elsewhere now, you have to declare this for the rest of your life as amended terms offered by insurance company. Some will treat you differently to others but that would involve you using an adviser to find out as they have access to underwriting terms and conditions and can find out which will penalise you least.

The company doesnt have to refund the fee and that is acceptable within the FSA's TCF rules (I had that told to me this week in my annual compliance visit). If you pay a fee, you are paying for the service and not the product.

jcumpsty

This is so bizarre. I spoke with homecall+ regarding my height/weight. It turns out when I applied on the phone, I was a bit cavalier with my height/weight. I reported myself as being 1" shorter than I actually am and 2 lbs heavier.

The difference meant that I got the originally quoted premium.

Can 1" and 2lbs really make that much difference?

Jeewhizz

Your BMI is 31.6 - you'll need to lose 11-12 pounds to get to sub 30.0:

BMI Categories:

* Underweight = <18.5
* Normal weight = 18.5-24.9
* Overweight = 25-29.9
* Obesity = BMI of 30 or greater

Jee