A Guide To Life Insurance - The Whole-life Policy Examples - More ....

 

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The Whole-life Policy Examples - More...

Mr and Mrs Dell, aged 68 and 65, have a large property and assets which they wish to pass on to their three children only when both of them are dead.

Since no CTT is payable on a transfer between husband and wife, no tax will be payable on the death of the first of them. So they take out a joint non-profit whole-life policy with the sum assured of £220,000 payable on the second death, again written under trust for the benefit of the children to avoid any tax liability on the proceeds. The annual premium is about £2670.

However, in practice the gifts may be exempt under one or more of the allowed exemptions, principally under the £22,000 per annum tax-free provision. see http://www.godirect.co.uk/life-insurance/whole-life-insurance.php

Even if this is already being used for other purposes, the gift may be exempt if the Inspector of Taxes is satisfied that it constitutes a normal expenditure out of income.

It is also worth noting that, though the non-profit whole-life policy is the cheapest method of providing for a CTT liability, it may not provide adequate funds if the value of the estate (and consequently the tax liability) continues to increase.

The longer the likely period until death of the owner, the greater the probability of this happening. A with profit policy may therefore be more suitable in many cases.


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Read On: click here for With Profit Whole-life Policies


Tax problems often arise in connection with partnerships, where the partner who retires or dies is due to receive a capital sum corresponding to his share in the partnership.
In most cases, providing this out of the current funds or earnings of the partnership is difficult if not impossible, and in an extreme case there may be no alternative to breaking up the partnership to release the money. Life insurance is a most convenient way of ensuring that such capital sums are readily available.click here for With Profit Whole-life Policies


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