Changes to Inheritance Tax (IHT) are leading more people to rethink how they pass on wealth. In particular, the tax efficiency of pensions needs to be considered as they will start to fall within the IHT net from April 2027.

At the same time, frozen tax thresholds and rising asset values mean more estates are subject to IHT. This has led to a clear increase in demand for life insurance as a practical planning tool.

How life insurance can help

Life insurance can play a valuable role in IHT planning by providing a lump sum on death to help cover the tax bill. This means beneficiaries may not need to sell assets such as property or investments to meet the liability.

When written in trust, the payout typically sits outside the estate and can be paid quickly to beneficiaries, helping avoid delays and additional tax exposure. At a time when options to mitigate IHT are becoming more limited, life insurance remains one of the more accessible solutions available.

Why acting early matters

It pays not to procrastinate as delaying decisions can be costly. Leaving planning too late reduces the available options and may lead to higher premiums or even limited insurability later in life.

A practical next step

Reviewing your position sooner rather than later can help ensure that any cover is affordable, structured correctly and aligned with your wider estate plan.

Financial protection policies typically have no cash in value at any time and cover will cease at the end of the term. If premiums stop, then cover will lapse.