Life Insurance Update on the position of life policies Written in Trust . Page 2

Having said that, there is now a danger that the tax charge of up to 6% could

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Life Insurance News

mean that there is insufficient IHT free cash generated by your policy to achieve your financial objective. If this is the case, don't take any action just yet.

The Association of British Insurers (ABI) is meeting the Treasury this week to discuss the situation thrown up on life insurance policies by these tax changes. The insurance industry believes that the Government brought in the package of anti IHT avoidance measures, which included life insurance policies written in trust, without fully appreciating the impact on the man and woman in the street. Some commentators believe that the Government will back track and take life policies out of these anti trust measures. We'll see!

Even if the new tax measures are not rescinded, existing life insurance policy holders should be aware of the transitional arrangements which will reduce their estate's tax bill. The Treasury is saying that only the part of the policy that was in force after budget day will be caught in the IHT net. This means that if you have a 15 year policy for £100,000 and it has already been in force for 5 years, then only 66.6% of any payout would be subject to the new 6% tax - so in this example, your estate would have to pay tax of £3,999.96 if your estate, excluding the insurance payout, fully exceeded the IHT £285,000 threshold.

We will provide our readers with an update as soon as we hear the outcome of the ABI's meeting with the Treasury this week.

Did you know?
Buying your car insurance policy online guarantees you the best deals. That's why 53% of all car insurance is now bought online. And when it comes to renewal time, shop around the Internet again! Please don't accept a renewal notice automatically without first checking out prices on the 'net - there's a good chance that you can still get it cheaper!

Today's Tip
If you want a cheap car insurance quotation then make sure that you get some quotations from car insurance brokers. Brokers automatically compare prices from the various insurance companies and offer you the best deals. And remember that cheapest is not always best - always check out the details of the cover - for example, whether a courtesy car is provided if your car is being repaired and whether legal assistance or windscreen cover is included. You also need to check out the excess on the policy.

Did you Know?
If you smoke, the cost of your life insurance will be about double. And it's no use just giving it up a few weeks or months before you apply. Most life assurance companies say you mustn't have smoked for a least 12 months prior to the application - and some insurers extend this to 5 years!

Did you Know?
The words term assurance are used by many people when what they really want is term insurance, more commonly known as life insurance.

There is no investment element within life insurance and so there's no payout if the policy reaches its termination date. A life insurance policy only pays out if the policyholder were to die (or become terminally ill and death is anticipated within 12 months of diagnosis - other conditions may apply), before the policy's termination date.