Families turn to life insurance as inheritance tax fears rise
- Changes to inheritance tax in the budget have led to increased interest in life insurance policies among families.
- More families are encountering inheritance tax bills due to rising property values.
- Life insurance is seen as a solution for managing the costs associated with inheritance tax.
In recent months, the changes to inheritance tax in the budget have prompted a surge in demand for life insurance policies among families grappling with the potential impact of these taxes on their estates. Inheritance tax (IHT) is a levy applied to an individual's estate upon their death, originally aimed at wealthier individuals. However, as property prices have soared, more families find themselves facing unexpected tax bills. The government’s recent adjustments are expected to exacerbate this trend, pushing the need for protective measures. Typically, IHT is charged on the total value of a person’s assets, excluding certain allowances, such as when an estate is bequeathed to a spouse or civil partner, who are exempt from these taxes. Additionally, if the total value of an estate falls below the current threshold of £325,000, no IHT is owed. Those who pass on their primary residence can also benefit from certain exemptions under specific conditions. As a result, individuals are increasingly considering life insurance policies as a viable solution to manage potential inheritance tax liabilities, suggesting a fundamental shift in how families approach wealth transfer and estate planning. These policies are being touted as effective means to ensure that heirs are not unduly burdened by tax obligations, allowing families to preserve their legacies while also providing peace of mind during a difficult time.