Recent changes to inheritance tax (IHT) have led to a surge in demand for life insurance policies as families seek to safeguard their wealth. Alan Knowles from Cura Insurance has seen a "noticeable increase in inquiries," highlighting the growing concern over IHT liabilities. The IHT threshold of £325,000 has remained unchanged since 2009, and with rising property prices, more families are facing potential tax bills. From April 2026, small business owners and farmers will also see reduced relief, while pensions will be taxed from April 2027. Life insurance can provide a tax-free lump sum to cover IHT bills, preventing beneficiaries from having to sell assets to settle debts. However, it is crucial to place these policies in a trust to ensure the payout is not included in the estate for IHT purposes.
