Managing Inheritance Tax is more important than ever - but beware of the pitfalls...

The Telegraph recently published an article titled "How insurance could spare your family an inheritance tax nightmare". The article explores how the right life insurance policy could help families mitigate the burden of inheritance tax (IHT) and help alleviate worries that might be caused by having to fund a large IHT payment.

Of course, this is not a new approach to family related financial planning.

As the Government has frozen the IHT threshold at £325,000 since 2009/10, and with the rise of property prices, it is becoming increasingly common for families to have to pay IHT at 40% of the excess value of their estate to HMRC.

In order to provide funds for their families to pay the IHT, there has been a significant increase in the number of people who have taken out Whole of Life insurance policies to help protect their families from this burden.

The Telegraph article argues that Whole of Life policies are most suitable life insurance policies for IHT planning. The Article also claims that “the premiums are guaranteed not to increase, even if you live much longer than expected, which means that they should remain affordable until death.”

Whilst, in principle, the advice put forward by the Telegraph is sound, in practice, our experience is that a significant number of these types of polices never performed as those who took them out intended. In fact, over the last 30 years or so, thousands of Whole of Life insurance policy holders have been forced to surrender their policies as the premiums became unexpectedly too high to afford.

Sadly, this has led to thousands of innocent policy holders not only forfeiting the payout and financial protection for their loved ones but also typically losing virtually all the money they had paid towards the policy up to that point.

Fortunately, help is now available to anyone who has been adversely impacted in this way because WLIClaims is working on behalf of a number of people who have had to surrender their policies to try to help them receive the significant compensation to which they might be entitled. This compensation is based on the premise that those affected have not achieved the financial security for which they bargained.

If this has happened to you or any of your loved ones, you could be eligible to receive tens, if not hundreds of thousands of pounds in compensation.

To find out more and to see if you are eligible, simply register with WLI Claims and a member of our team will get in touch with you without any obligation to see if we might be able to help.