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AIG launches life assurance tailored to IHT planning

AIG launches life assurance tailored to IHT planning

AIG Life has introduced a joint life second death product to its range as an alternative to whole of life insurance for couples looking to gift assets and limit their IHT liability by a certain age.

A joint life second death policy is a life insurance product that pays out when both members of the couple insured are deceased.

AIG Life will also offer a ‘gift inter vivos’ plan - offering the opportunity to pay the reducing IHT liability on gifts made over the term of the insurance - without the need for policyholders to answer additional health or lifestyle questions.

Andy Roberts, technical sales manager at AIG, said using life cover for inheritance tax planning was not always as simple as taking out a whole of life policy.

He said: "Financial advisers proactively help clients reduce their liability over their lifetimes and the developments we are announcing today dovetail with that approach."

To accommodate customers investing in business relief qualifying schemes, AIG has reduced its minimum term to two years - the schemes will be free of IHT after the two year period, but fully liable in the meantime.

Mr Roberts said: "Business-relief qualifying schemes are an increasingly popular way to reduce an IHT liability, but it is important to remember life cover is still required, even if it is only for a two-year period."

Anna Graham, chief pricing actuary at AIG Life, said the features have been developed to make IHT cover accessible and affordable to as many people as possible.

She said: "People who do inheritance tax planning have a right to affordable life insurance because they are doing something positive to benefit their families and loved ones - we have worked hard to keep the customer in mind when pricing these new term assurance options."

Alan Lakey, director at CIExpert, said: "This is another good move into an admittedly niche area, albeit one where the premiums tend to be much higher due to the sums assured and the ages of the placeholders.

"Joint life second death cover is an excellent way of protecting assets against IHT privation without having to give them away, as some people feel compelled to do in their old age."

Mr Lakey added: "The ability to also arrange a gift inter vivos plan without proof of health is another excellent aspect to this."

rachel.addison@ft.com