Life policy definition

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Death in service benefits

Overview of the types of death in service benefits and their tax treatmentThere are three types of death in service benefit (also known as ‘life assurance’ benefit or ‘life cover’ benefit) which employers may provide by way of a life policy:•the registered group life policy•the relevant life policy•the excepted group life policyThey share the same characteristics:•employees eligible for the policy benefits must be aged between 16 and 74•the use of a discretionary trust should avoid any charge to inheritance tax (‘IHT’) on a given employee's death•employer-paid premiums are usually tax-deductible•premiums are not treated as a benefit in kind for employeesThe registered group life policyThis is a group policy registered with HMRC pursuant to Part 4 of the Finance Act 2004 (FA 2004). It offers employers a flexible approach to meeting the death in service benefits promised to their employees. The policy, which must be registered as a scheme with HMRC, covers lump sum benefits payable on the death of an employee.As soon as an employee satisfies the ‘eligibility’ and ‘actively...

Life insurance and estate planning

Overview of the use of life insurance in estate planningLife insurance or life assurance can be an important tool in estate planning. This Practice Note summarises the main types of insurance available on the market, considers their usefulness in estate planning and evaluates the relevant tax considerations.A principal issue in estate planning is funding the inheritance tax (IHT) liability arising on the death of an individual where no spousal exemption applies and the assets of the deceased comprise in some material part illiquid property such as land, shares in a business that may not attract business property relief and chattels (eg works of art which are not subject to the conditional exemption regime). Although IHT instalment property relief for illiquid assets, which spreads payment of tax over ten years with interest added, can be available, the problem remains that the IHT has to be paid, and it may be difficult to generate liquid funds to do so.Insurance can provide the liquid funds needed on the death of an individual. If...

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Will—unmarried, divorced, separated with children, no partner

Will—unmarried, divorced, separated with children, no partner STOP PRESS: Abolition of non-dom regime and introduction of residence-based IHT regime. Finance Act 2025 (FA 2025) which received Royal Assent on 20 March 2025, implements legislation to abolish the remittance basis of taxation and replace it with a residence-based regime, commencing on 6 April 2025. FA 2025 also replaces domicile as the key factor in establishing liability to inheritance tax. Other changes include amendment of the rules determining excluded property status, the abolition of protected settlements status of offshore trusts, and changes to overseas workday relief. For information on these changes, see Practice Notes: The abolition of the remittance basis of taxation from 2025–26 and A new residence-based regime for IHT from 2025–26. See also: Finance Bill Tracking Service: Key dates (Finance Bill 2025) and Finance Act 2025. 1 Revocation I [full name of testator] of [address of testator] revoke all former testamentary dispositions made by me[ to the extent that and so far only as they affect my property of every...

Life insurance trust—incorporating an assignment of the policy

Life insurance trust—incorporating an assignment of the policy This TRUST is made on [date] Parties 1 [settlor] of [address] (the Settlor) and 2 [original trustees] of [addresses] (the Original Trustees) Background (A) The Settlor is absolutely entitled to the life insurance policy (the Policy), the particulars of which are contained in Schedule 1. (B) The Settlor wishes to assign the Policy to the Original Trustees to be held by them on the following trusts. This Deed provides: 1 Definitions and interpretation 1.1 In this trust: Beneficiaries • means (subject to the provisions of clause 8) the following persons: (a) the Settlor’s [ [widow OR widower] whether or not remarried]; (b) the descendants of the Settlor; and (c) the spouses and any widow or widower (whether or not remarried) of the descendants of the Settlor, and Beneficiary has a corresponding meaning; Charitable • means charitable (and exclusively charitable) according to English law; Charity • means a trust, corporation, association, society or...

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Where a trust of a life policy otherwise falls within the definition of an 'excluded trust' set out in paragraph 4 of Schedule 3A of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017, does it lose that excluded trust status if it opens a non-interest bearing bank account in order to pay insurance premiums for the policy?

Where a trust of a life policy otherwise falls within the definition of an 'excluded trust' set out in paragraph 4 of Schedule 3A of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017, does it lose that excluded trust status if it opens a non-interest bearing bank account in order to pay insurance premiums for the policy? It is assumed that the operation of the bank account is for no purpose other than to pay premiums In general, all UK express trusts are required to register on the Trust Registration Service (TRS), even if they do not have a UK tax liability, unless they are excluded from registration under one of the exclusions listed in the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017, SI 2017/692, Sch 3A. However, the exclusions do not apply if the trust incurs a liability to UK tax. Non-UK express trusts may be required to register if they have links to the...

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Private Client weekly highlights—1 May 2025

This week’s edition of Private Client highlights includes: (1) Hubbard v Hubbard, where the lack of credible evidence resulted in the disallowance of a claim for trustee expenses; (2) NHS South East London ICB v JP & the Royal Hospital for Neuro-Disability, which considered issues of dignity, delay, and declarations on best interests; (3) R (YVR) v Birmingham City Council, a decision involving adult social care charging policies, the public sector equality duty, and severely disabled adults; (4) HMRC publishes Tax update spring 2025; (5) CIOT’s response to the consultation on reforms to agricultural property relief and business property relief concerning their application in relation to trusts; (6) Patel v Patel, where the High Court resolved a dispute between two executors over the funeral arrangements for their father, and (7) the Courts and Tribunals Judiciary publishes updated AI guidance and introduces Copilot Chat for judges.

Question of the week: Where a trust of a life policy otherwise falls within the definition of an 'excluded trust' set out in paragraph 4 of Schedule 3A of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017, does it lose that excluded trust status if it opens a non-interest bearing bank account in order to pay insurance premiums for the policy?

This Q&A considers whether a trust of a life policy, which otherwise falls within the definition of an 'excluded trust' as set out in the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017, Sch 3A, para 4 loses its excluded trust status if it opens a non-interest bearing bank account to pay insurance premiums for the policy.

View the latest UK Parliament Acts documents on Life policy

Financial Services and Markets Act 2000 (2000 c 8)

Financial Services and Markets Act 20002000 CHAPTER 8An Act to make provision about the regulation of financial services and markets; to provide for the transfer of certain statutory functions relating to building societies, friendly societies, industrial and provident societies and certain other mutual societies; and for connected purposes.[14th June 2000]BE IT ENACTED by the Queen's most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the authority of the same, as follows:—Part I . . .1 . . .. . .2 . . .. . .3 . . .[3A . . .]4 . . .5 . . .6 . . .[. . .][6A . . .]. . .7 . . .. . .8 . . .9 . . .10 . . .11 . . .. . .12 . . .13 . . .. . .14 . . .15 . . .16 . . .17 . . .18 . . .[Part 1A The Regulators][Chapter 1 The Financial Conduct Authority][The Financial Conduct Authority][1A The Financial Conduct Authority][The FCA's general duties][1B The FCA's general duties][1C The consumer protection objective][1D The integrity objective][1E The competition objective][Interpretation of terms used in relation to FCA's general duties][1F Meaning of “relevant markets” in strategic objective][1G Meaning of “consumer”][1H Further interpretative provisions for sections 1B to 1G][1I Meaning of “the UK financial system”][Modifications applying if core activity not regulated by PRA][1IA Modifications applying if core activity not regulated by PRA][Power to amend objectives][1J Power to amend objectives][Recommendations][1JA Recommendations by Treasury in...