Life Insurance customers waste millions with poor policy management
Poor policy management and a lack of knowledge by life insurance customers in Britain is costing customers £448million a year according to research from one of the leading tax advice firms in the country.
Life Insurance does generally not incur inheritance tax, as the money is left to another person directly, with the claim only activated if the original customer was to die. The problems start to occur when the person who is left the money dies at the same time, or is already dead.
Most people choose to leave their life insurance payout to their other half, or directly to children. If they were then involved in an accident or incident and died at the same time as the named beneficiaries, the money would be left to someone who had already died, and would form part of their estate.
If their estate is worth more than £325,000, then the customer’s estate loses 40p of every further pound to the tax man, in the form of inheritance tax.
That means a customer leaving £100,000 could see £40,000 go straight into the hands of the tax man through the management of their life insurance policy.
Experts are now advising that customers leave their life insurance under trust, which removes the asset from the estate completely, and means it would not attract in heritance tax if the beneficiary died at the same time as you, and the full amount would be left to their children.
Unbiased Chief Executive, Karen Barrett explained, “Ensuring your life insurance payout no longer forms part of the estate is one of the simplest and most effective ways of avoiding ‘death tax’ wastage.
She added, “It also reduces the legal loop holes which beneficiaries are usually faced with thereby making it both quicker and easier to distribute the money to the right people.”
To compare life insurance prices before they rise and to make sure your life insurance is left with the correct wording compare life insurance quotes at lifeinsurancequotes.co.uk.