inter vivos gift insurance

monkeynook

Hi all,

We're currently sorting out estates and inheritance  planning for my mother in law who has gifted my partner substantial gifts. We are trying to arrange inter vivos insurance that will cover the inheritance tax if she passes before 7 years as it steps down in £ insured as the inhetience % drops over the 7 yr period

Currently our accountant and solicitor advised to go through a recommended financial advisor for this, it seems you cannot just go to a broker and arrange such a policy and that it has to be done via an IFA. Issue is as always the IFA is saying they have to draw up a "report" to progress further and start process with whatever broker they're using. They want to charge us £5k for this... and if its anything like the report they did to summerise my mother in laws estate and financial projections its something we can do in a few hours and doesn't provide much further insight.. 

Is it really not possible/ advised to get this insurance via a normal broker?

Many thanks

Keep_pedalling

IFAs don’t use a broker they have direct access to the products from the insurers. They can’t receive commission so unless you are already a client there will be a fee. We do use a IFA so did not get charged to set our policy up.

None of the big insurers provides these policies direct to the public but you might find a more obscure insurer who does. If not could she not put a simple term life policy in place instead?

dunstonh

Issue is as always the IFA is saying they have to draw up a "report" to progress further and start process with whatever broker they're using. 

It is a requirement of the insurance directive.  

and if its anything like the report they did to summerise my mother in laws estate and financial projections its something we can do in a few hours and doesn't provide much further insight.. 

Almost certainly the process will take a lot more than a few hours as the IFA needs too verify need and the reasons and do the calculations.   The report is usually one of the shortest documents on the file (which can usually run closer to 500-1000 pages overall).   There may be some scope to reduce the work if the solicitor is willing to take on the liability for calculating the need and documents everything.

They want to charge us £5k for this...

That means they are doing it on nil commission basis. (choice is fee or commission).  Insurance can still be done on commission basis (which is how most non-advised insurances are done).    Commission basis means the premium will be higher and the commission could be higher than the fee.

You could shop around as £5000 seems a lot where a solicitor is taking the liability for the figures but if the IFA is doing all the calculations then the cost is not the report but the liability.

monkeynook

Thanks both. Fully understand fee vs commission structure. Its more they're charging this much for a report before confirming if cover will be given! Although they say they've got one provider line up who is willing. 

The mother in law isn't in great health and nearing the age cut off so we fully understand it will be expensive premiums etc. I realise its all about various regulations and taking on liability, however it always seems to result in lots people trying to take their 1% ! We're happy to pay for a service and make sure its done right, just everything seems to require a "report" these days!

dunstonh

We're happy to pay for a service and make sure its done right, just everything seems to require a "report" these days!

Its the nanny state we live in.    However, the report is not what you are paying for. That is just a summary of the reasons why it is recommended.  

Weighty1

Very few insurance companies offer gift intervivos cover and becausee of that it is generally not cost effective to arrange anyway.  A simpler solution could be to arrange a standard level term assurance which provides a fixed payout.  Yes, this would provide more cover than is needed as time passes but actually it could be a cheaper solution anyway, which would result in a win:win scenario.

dunstonh

Weighty1 said:

Very few insurance companies offer gift intervivos cover and becausee of that it is generally not cost effective to arrange anyway.  A simpler solution could be to arrange a standard level term assurance which provides a fixed payout.  Yes, this would provide more cover than is needed as time passes but actually it could be a cheaper solution anyway, which would result in a win:win scenario.

DTAs have been arranged in similar scenarios too.