Life insurance is a simple, effective and transparent instrument which can protect against many uncertain events, yet wealthy individuals often disregard life insurance, reasoning they have wealth to cover any eventuality.
However, often assets are tied up in property or investments, and there is a limited source of liquidity. When income is high, often spending is too and the premature death of a main wage earner may have significant implications for the whole family. On death, the government retains 40% of an individual’s estate in Inheritance Tax, which is often more than is received by individual family members.
In each of these situations, life insurance can provide a valuable injection of capital and is effective at providing a solution to multiple issues. As an estate planning tool it can provide the cover for Inheritance Tax (IHT), leaving other assets in place to be passed on to the next generation.
It protects debts and businesses and when compared with traditional savings or investment products it can also offer sound returns.
This is a Financial Promotion
Important notice: Investments can go down as well as up and your capital may be at risk.
Because many people prefer not to face their own mortality, life insurance may be difficult to consider. However, the risks of not addressing the subject can be considerable. There are a number of areas where life insurance can be used in wealth planning:
Life insurance can help to mitigate IHT exposure, which may exist in any of the following scenarios:
Life insurance can help to mitigate IHT exposure, which may exist in any of the following scenarios:
Where estates contain substantial assets, such as family businesses and landed estates, equalisation between beneficiaries can be problematic. A life insurance policy can be gifted to one beneficiary, ensuring other assets remain in place and beneficiaries receive a cash benefit at the point of death.
Where estates contain substantial assets, such as family businesses and landed estates, equalisation between beneficiaries can be problematic. A life insurance policy can be gifted to one beneficiary, ensuring other assets remain in place and beneficiaries receive a cash benefit at the point of death.
Protects the family financially against the sudden death or illness of a family member.
Protects the family financially against the sudden death or illness of a family member.
Protects the family financially against the sudden death or illness of a family member.
Often families are dependent on a main earner’s income to sustain their quality of life. An Income Protection Plan creates a replacement income should the individual become incapacitated and unable to work.
Ensures debts can be repaid on death or contraction of an illness.
There are a range of products to support businesses:
In the unfortunate event of a divorce, provision is often required for protecting maintenance payments. In addition, individuals who benefited from a husband and wife exemption for IHT may become exposed.
Whole of Life Assurance (WOL) is a solution which resonates with many of our clients due to its simplicity and value driven outcome. WOL can be summarised as follows: