People taking out
life insurance could substantially cut their tax bill by being aware of a money-saving tip, an expert has said.
Recent research commissioned by the Financial Times indicated that customers are not always informed of the simple procedure.
Justin Modray, a former independent financial adviser, said policy holders can save thousands of pounds in tax by writing their
life insurance into trust.
By doing so, it is then possible to avoid any death benefits paid out being subject to
inheritance tax.
“I think life cover is generally well suited to low-cost online non-advised sales – provided issues such as the potential benefit of holding the policy in trust are clearly highlighted,” Mr Modray said.
However, the study found that some price comparison websites were not being abundantly clear about the potential savings, often leaving it to the insurer to relay the information.
"There’s no guarantee that the insurer or broker that a comparison site points customers towards will do so – which runs the risk of the customer missing out," Mr Modray added.
Customers interested in setting up a
life insurance policy in trust can obtain the relevant forms from their insurance company, which should be supplied free of charge.
