"Incorporating Life Insurance into estate planning allows customers to ensure assets are managed according to their wishes."
- Jennifer Gilchrist, Protection Expert at Royal London
Joint Life Second Death plans provide a payout on the second individual covered if they die or diagnosed with a terminal illness, during the term of cover – up to the age of 90. Royal London provides this option through its Whole of Life (WOL) plan but has now made it available on its Term Life Insurance. This product has been designed as a cost-effective alternative to WOL policies for those with potential Inheritance Tax (IHT) liabilities.
The mutual explained that Joint Life Second Death gives advisers more options for IHT planning, allowing them to offer more choice to customers. This includes affluent and high-net-worth individuals over the age of 40 who (usually) possess substantial assets and have limited liquidity.
Royal London’s plan features a gifting option, enabling assets given to the family during the individual’s lifetime to be protected. Individuals can make lifetime gifts, carving out a portion of the sum assured with a separate ‘gift inter vivos’ policy to insure against the cost of them dying within seven years of the gift, after which the asset passes tax-free. Crucially, there’s no need for medical re-underwriting when using the gifting option.
“The subject of IHT has found itself in the spotlight recently. It will continue to be a focus for advisers and their customers as the application of IHT to pensions, business, and agricultural property, as announced in the Budget, challenges the financial planning mindset and leads to a radical re-think for estate planning,” explained Jennifer Gilchrist, Protection Expert at Royal London.
She said: “Over time, more people could face a liability when passing on assets to their next of kin. It also means that Life Insurance policies will become more popular for those facing larger liabilities. Incorporating Life Insurance into estate planning allows customers to ensure assets are managed according to their wishes.
“Whilst some of the changes won’t impact until April 2026, our new proposition is coming at the right time, helping to assist advisers reviewing existing customers’ circumstances and filling any gaps in their existing provisions. Additionally, it may provide opportunities to attract new customers with an expanded market interested in this type of cover,” Jennifer added.
Responding to the launch, Paul Roberts, Proposition & Distribution Director at CIExpert, said “Not only does this new Joint Life Second Death plan offer an alternative to those who may find WOL policies too expensive, it includes innovative options to cover lifestyle events such as gifting, conversion, separation, and increasing cover as a result of changes in IHT legislation, without the need for additional medical re-underwriting.
“By making this available via its Personal Menu Plan (while it doesn’t give the full security of a WOL plan), it also benefits from Underwrite Later, Online Trusts, TeleApps, Send2Client, and unique second event terminal illness benefit before the age of 90, as well as access to Royal London’s Helping Hand Health & Wellbeing Services,” he concluded.
