High net worth? What cover is right for me?

Do High Net Worth individuals require life insurance? Often, yes.  Keep reading our guide to find out more about Inheritance Tax Planning, Family Protection and Gift Inter Vivos policies.

Most high-net-worth individuals have assets which could result in an inheritance tax (IHT) liability if they pass away. Often property based, these can be of a significant value and although there are complicated inheritance tax planning solutions many accountants can offer, these prove expensive. There are different options which may be suitable for you.  A whole of life insurance policy can be more cost-effective and relatively simple to set up.

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.

Do you want to gift part of your estate to your beneficiaries immediately?

Firstly you will be able to see them enjoy the benefits and secondly, this will reduce your estate for the purposes of IHT. However, there is a potential IHT liability on the gift during the first 7 years that follow the donation. The liability receives tapered relief and will reduce over time.

There is a Gift Inter Vivos life insurance policy which covers a 7-year term. The initial sum assured matches the tax liability and reduces over the term as the liability tapers. This is often the most cost-effective policy to ensure funds are available to cover an IHT bill.

Family Protection

People with families will understand the need to purchase protection for children or spouses. With estates often tied up in investments, it can take time for them to be liquefied, meaning life insurance is needed. It is a swift solution and can provide valuable assistance with schooling or even just give the family time to decide what is the best course of action.

  • Many High Net Worth clients may partake in unusual sports or past times. These can range from any form of motor sport to mountaineering or expeditions. It is essential that these past times are properly disclosed to any life insurance company to ensure the cover is not affected.

  • Although you might have private medical insurance or access to personal physicians, would it still be helpful to have a lump sum to just simply provide breathing space and make sure there are no financial issues?  You should consider a Critical Illness policy as this leaves you free to focus on the illness and getting better.

  • This is not often an issue as income is sustainable with little or no influence. If you are required to work for you income than an Income Protection policy is an area you should consider.