Using life insurance to cover the inheritance tax tail for a high-net-worth client’s gifting strategy

The client’s circumstances

The client had gifted £20 million of assets to his children over the previous three years. Initially, there was no cover in place, however, they wanted to ensure the remaining IHT tail would be covered by way of life insurance and the full tail for additional gifts that were due to be made.

Issues addressed

Prior to engaging John Lamb Hill Oldridge, the client had been advised to apply for a specific gift inter vivos policy with the cheapest insurer on the market. Due to certain lifestyle disclosures, the client was automatically declined cover.

Tailored solution provided by John Lamb Hill Oldridge

Upon engagement, we recommended that the client take out a series of term policies specifically designed to align with the liability over the remaining seven years, carefully considering the timing of prior gifts.

After consulting with our in-house underwriter, we conducted a comprehensive market search and successfully secured terms from an insurer willing to offer perfect health rates, without any premium loadings related to the client’s lifestyle disclosures.

By structuring the solution as multiple term policies, we were able to fully cover the client’s IHT liability while also achieving lower overall premiums compared to the previously recommended gift inter vivos policy.