Aegon has launched a new whole of life protection policy after its research revealed that less than a third of people have taken measures to mitigate their inheritance tax liability despite the vast majority being fully aware that the government could take 40 per cent of inheritance on death.
Over 70 per cent of those surveyed by Aegon UK have not taken measures to mitigate their inheritance tax liability, with reasons given including the lack of an adviser, the cost of seeking advice, and finding the issue too complicated.
At the end of September, the firm asked around 1,100 members of its customer panel aged 40 and over about their inheritance tax preparedness. Some 87.5 per cent were aware that the government could take 40 per cent of inheritance tax on death, however, only 29 per cent had taken measures to mitigate their inheritance tax liability.
Of this group who had taken appropriate measures, 40 per cent had sought assistance through a financial adviser, with a further 31 per cent seeking assistance from a solicitor.
Overall 90 per cent said they were interested to hear about ways to potentially protect the value of the estate so they could pass on more to family or loved ones and Aegon UK has responded by launching a new whole of life protection policy.
Dougy Grant, protection director at Aegon UK, told FTAdviser that the product is clearly aimed at an advised sale and financial advisers have a big part to play, as the target market is likely to already be used to accessing such advice.
“The launch is deliberately aimed at the core wealth planning market. We’ve made a push for wealth advisers to do more protection policy work by getting our platform consultants talking about it and running multiple workshops across the country bringing together protection people with wealth advisers.”
Mr Grant added that protection sales within wealth advisers have gone up by 40 per cent during the first six months of the year and are on course to outstrip that growth during the second half.
Aegon’s inheritance tax planning solution comes in the form of a whole of life protection policy that can be placed in a discretionary trust, making it the only provider to offer an integrated trust process to place a whole of life policy in trust at application.
Mr Grant explained that only around 10 per cent of people put their policy in trust, something which informed the way the product was built, forcing customers to opt out, rather than opt in like most policies.
The new solution is also unique in offering free cover in trust, so if a customer is eligible for free cover and their adviser uses Aegon’s integrated trust process, their free cover will also be placed in trust. If they were to die while Aegon was processing the application, any free cover would not add to the inheritance tax bill, Aegon said.
peter.walker@ft.com