Structured IHT protection strategy for a £2m estate

What was the situation?

What was the issue?

Inheritance tax planning must work not only on paper, but in real family circumstances.

The client’s objective was to put suitable protection in place as part of a wider estate planning strategy, without being forced into significant gifting decisions prematurely.

Where gifting is not yet appropriate, life insurance is often explored as part of inheritance tax (IHT) planning, with whole of life cover typically assessed as an initial route. In this case, due to the client’s age and the level of cover required, the premiums were not aligned with the client’s affordability expectations.

Gifting represented another potential route. However, family circumstances meant the client was not ready to proceed at that stage. One of their children was not yet married, and the client had concerns about assets potentially leaving the direct bloodline in future.

The priority was therefore clear: establish appropriate protection now, while preserving flexibility around longer-term estate planning decisions.

What was the process?

Robert Fox, Protection Director, assessed the most suitable protection structures to deliver that strategy, focusing on solutions that balanced affordability in the short term with flexibility for future planning.

Robert structured a reviewable premium term assurance solution, introducing an alternative route the client had not previously considered.

A key part of the advice was ensuring the client understood precisely how reviewable premiums operate in practice. This included:
– the initial fixed premium period
– what happens at the policy review point
– how premiums are reviewed and can increase after the fixed period
– why the wider estate planning position should be reviewed before any increases take effect

This provided a defined planning window, enabling the client to take meaningful action immediately while maintaining control over future decisions.

What was the solution?

A reviewable term assurance policy was implemented, with premiums fixed for the first 10 years. After this period, the policy would be reviewed, with premiums increasing annually thereafter, creating a clear future decision point for the client.

The structure delivered:
– an affordable route to putting cover in place immediately
– protection aligned with the client’s inheritance tax planning objective
– a defined timeframe to revisit gifting and broader estate planning decisions before higher premiums applied later

Crucially, it also provided clarity around the longer-term strategy. By the 10-year point, the client would either have reduced the underlying inheritance tax exposure through gifting over time, reduced the estate through expenditure over the period, or choose to retain the policy and accept higher premiums thereafter.

The client was highly appreciative of the outcome and felt reassured that a well-structured protection solution was now in place, without being forced into immediate gifting decisions.

The case highlights LDN Finance’s specialist protection expertise within estate planning, particularly where the most suitable outcome is a structured approach that provides clarity, control and flexibility. This gave the client immediate protection and a clear planning window, without forcing decisions before the time was right.

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