Life insurance for non UK residents protecting a UK asset
If, once you’ve read this case study, you’d like to talk through your situation, please call 0800 644 4468
Monday to Thursday from 09.00 to 19.00 and on Friday between 09.00 and 17.00.
The first thing we do is pick up the phone. We speak to Underwriters at many of the UK’s leading Insurance companies. Discussing all of our client’s medical history helps us to identify the best company to apply to. This also means we avoid applying to companies who will end up being too expensive or worse, decline an application. By completing our research thoroughly, we are able to avoid wasting time and obtain the best terms possible for our clients.
Our client is a 72 year old lady who was gifting her UK property to her son as a Potentially exempt transfer.
She had an inheritance tax liability of £600,000 which the family wanted to protect using Gift Inter Vivos. Our client was still a British passport holder however she had moved to the Republic of Ireland 5 years ago with no intention of moving back.
Gift Inter Vivos Insurance is a form of life insurance taken out over a 7 year term, that covers the potential Inheritance Tax (IHT) liability created, when someone gives a sum of money or other assets away while they are alive.
Most companies would decline our client due to her residency in Ireland, however one insurance company was able to cover her on standard rates.
It is important to note that the reason this was possible is because the client used to live in the UK and has a UK passport, she was protecting a UK Asset.
As the sum assured was £600,000 a medical screening was needed before terms were offered and this could only take place in the UK. Also, had she had a more complex medical history the cover would have been declined as the insurance company can only write to a UK Doctor surgery.
£600,000 over a term of 7 years cost an initial monthly premium of £608.50*. However, this premium would reduce by around £100 every year after 3 years as the inheritance liability reduces.
According to HMRC 2018 :
The 7 year rule
If there’s Inheritance Tax to pay, it’s charged at 40% on gifts given in the 3 years before you die.
Gifts made 3 to 7 years before your death are taxed on a sliding scale known as ‘taper relief’.**
|Years between gift and death||Tax paid|
|less than 3||40%|
|3 to 4||32%|
|4 to 5||24%|
|5 to 6||16%|
|6 to 7||8%|
|7 or more||0%|
Gifts are not counted towards the value of your estate after 7 years.
*Please note that the premiums provided are indicative only and based on this specific case study/ example, which is shown for information purposes only. Your own circumstances will determine whether the amount payable is more or less than the figure quoted.
**The levels and bases of taxation, and reliefs from taxation, can change at any time. The value of any tax relief depends on individual circumstances.
Whilst you are welcome to get a quote on-line we would recommend you talk to one of our advisers.
Any quote that your adviser provides you with will take into account to your circumstances, your medical history, as well as your budget!
An on-line quote is just that – a quote – it isn’t a definite offer of cover. What really matters is the premium you are offered, after your application has been assessed.
Call Freephone 0800 644 4468 – Monday to Thursday from 09.00 to 19.00 and on Friday between 09.00 and 17.00.
Take a look at our handy guides ‘What Cover is Right for me?’
Do you suffer with a medical condition or take part in a hazardous past time and are concerned you can’t secure Life Insurance? Please view our ‘Guides’ for further information or give us a call.
Whilst we will make every endeavour to help someone to arrange insurance, there is no guarantee of success. All applications are subject to underwriting.
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