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Life Insurance in Estate Planning: IHT Mitigation Strategies for Advisors

· 20 min

Executive Summary

The convergence of frozen inheritance tax thresholds, pension death benefit inclusion from April 2027, and the residence-based IHT regime enacted from April 2025 has materially expanded the population of estates facing IHT liabilities. HMRC projects 10,500 estates will incur IHT for the first time from 2027-28, while receipts already reached GBP 5.8 billion in the first eight months of 2025-26.1 Life insurance written in trust remains one of the few mechanisms that simultaneously addresses liquidity risk, reduces the taxable estate, and provides certainty of outcome. However, correct structuring is determinative: the interaction between the normal expenditure out of income exemption under s.21 IHTA 1984 and gifts with reservation rules under s.102 Finance Act 1986 presents a critical trap for the unwary. This article provides IFAs and protection specialists with the legislative framework, trust structuring guidance, and regulatory context required to deploy life insurance effectively within the reformed IHT landscape.

1. The Expanding IHT Liability Landscape

Frozen Thresholds and Fiscal Drag

The nil-rate band has stood at GBP 325,000 since 2009-10. The residence nil-rate band, introduced at GBP 100,000 in 2017-18, reached its maximum of GBP 175,000 in 2020-21. Both thresholds were frozen through 2027-28 by Finance Act 2021, as amended by Finance Act 2023. Budget 2025 announced a further extension through 2030-31, with legislation to be introduced in Finance Bill 2025-26.2 The taper threshold remains at GBP 2 million, above which the RNRB is withdrawn at GBP 1 for every GBP 2 of excess.

The consequence is fiscal drag on an unprecedented timescale. A qualifying estate -- where the main residence passes to direct descendants -- can shelter up to GBP 500,000 per individual or GBP 1 million per couple. However, ONS data shows median UK house prices continuing to rise against static thresholds, pulling previously sub-threshold estates into IHT scope. IHT receipts for April to November 2025 reached GBP 5.8 billion, GBP 84 million above the equivalent prior-year period.3 The OBR forecasts annual IHT receipts of GBP 14.5 billion by 2030-31.4

For advisors, these figures reframe life insurance for IHT from a high-net-worth niche to a mass-market advisory requirement. Estates with modest property wealth, moderate pension accumulation, and limited liquid assets increasingly face both a liability and a liquidity problem that life insurance is uniquely positioned to address.

Pension Death Benefits: The April 2027 Inflection Point

At Autumn Budget 2024, the government announced that unused pension funds and death benefits would be brought within the IHT estate from 6 April 2027.5 The subsequent technical consultation, running from 30 October 2024 to 22 January 2025, confirmed a personal representative-led model: PRs rather than pension scheme administrators will be responsible for reporting and paying IHT on pension assets.6

The scale of impact is substantial. HMRC estimates that of approximately 213,000 estates with inheritable pension wealth in 2027-28, 10,500 will have a new IHT liability and 38,500 will pay more IHT than previously, with an average additional liability of GBP 34,000.7 PRs may direct pension scheme administrators to withhold up to 50% of taxable pension benefits for up to 15 months from the date of death to facilitate IHT payment.

This creates a new category of estate where the principal illiquid asset -- the pension fund -- is now part of the taxable estate but cannot readily be liquidated to pay IHT within the six-month payment window. Whole-of-life insurance written in trust provides the primary liquidity solution for this cohort.

APR/BPR Relief Cap: Business and Agricultural Estates

The convergence of IHT reforms extends beyond pensions and thresholds. From April 2026, agricultural property relief and business property relief are subject to a combined cap of GBP 2.5 million at 100% relief, with relief on values above the cap reduced to 50%. The allowance is transferable between spouses and civil partners, effectively providing GBP 5 million of 100% relief per couple.8 For business owners and agricultural estate holders with qualifying assets above the cap who previously relied on full APR/BPR relief to eliminate IHT liabilities, this reform creates a new exposure that life insurance in trust can directly address -- particularly where the underlying assets are illiquid and cannot be readily sold to fund the resulting IHT charge.

The Residence-Based Regime and Worldwide Assets

From 6 April 2025, the long-term UK resident test replaced domicile as the IHT connecting factor. An individual is classified as a long-term UK resident if UK-resident for at least 10 of the preceding 20 tax years.9 Departing residents face tail provisions of 3 to 10 years depending on the duration of prior UK residence.10

For internationally mobile clients, the regime expands IHT exposure to worldwide assets during both the residence and tail periods. Life insurance in trust serves a dual function for this cohort: covering the expanded IHT exposure during the tail period and providing liquidity where worldwide assets may be difficult to realise within UK IHT payment timelines. The LTUR test applies irrespective of common law domicile, meaning advisors can no longer rely on domicile planning to manage IHT exposure for long-term residents.

2. The Legislative Framework: Life Insurance and Inheritance Tax

Section 167 IHTA 1984: Policy Valuation

The valuation of life insurance policies for IHT purposes follows specific rules under s.167 IHTA 1984. For lifetime transfers, the value of a policy is taken to be not less than the total premiums paid, less any sums received on surrender.11 This minimum value rule does not apply on death, where the claim value -- the sum payable by the insurer -- constitutes the transfer value.12

The practical significance for advisors is that a policy transferred inter vivos (for example, assigned into a trust) carries a minimum value equal to cumulative premiums paid, even if the market or surrender value is lower. This can create an unexpected chargeable value where a policy with significant accumulated premiums is settled into trust.

Section 3A IHTA 1984: PETs, CLTs, and Trust Type

The act of placing a life policy into trust constitutes a transfer of value. The IHT treatment of that transfer depends on the type of trust selected. Under s.3A IHTA 1984, a transfer qualifies as a potentially exempt transfer only where it is made by an individual to another individual, into a disabled person's trust, or into certain other qualifying trusts.13 Critically, a transfer into a discretionary trust does not qualify as a PET -- it is a chargeable lifetime transfer, immediately chargeable at 20% on the value exceeding the available nil-rate band.

For bare trusts, where the beneficiary has an absolute entitlement, the transfer is treated as a gift to that individual and therefore qualifies as a PET under s.3A. If the transferor survives seven years, the PET becomes fully exempt. Death within seven years renders the transfer chargeable, with taper relief available from year three.

For whole-of-life policies with minimal surrender value at the point of trust creation, the chargeable value -- whether as a PET (bare trust) or CLT (discretionary trust) -- is typically negligible. However, where an existing policy with accumulated value is assigned into trust, the s.167 minimum value rule applies, potentially creating a significant transfer. Advisors should consider both the trust type and whether establishing a new policy directly in trust -- rather than assigning an existing policy -- produces a more favourable IHT outcome.

Section 21 IHTA 1984: Normal Expenditure Out of Income

Premium payments on a life policy held in trust may qualify for the normal expenditure out of income exemption under s.21 IHTA 1984. Three cumulative conditions must be satisfied: the expenditure must form part of the transferor's normal expenditure; it must be made out of income, taking one year with another; and the transferor must retain sufficient income to maintain their usual standard of living after the payment.14

The exemption is significant because, unlike the seven-year PET rule, qualifying payments are immediately exempt -- there is no survival requirement. HMRC guidance at IHTM14231 confirms that the exemption applies to regular premium payments on life policies, and the case of Bennett v IRC established that a pattern of expenditure need demonstrate only "substantial conformity with an established pattern" rather than absolute regularity.15

However, the exemption carries limitations. Section 21(2) excludes premiums on policies linked with purchased life annuities, a structure historically used to create back-to-back arrangements. HMRC expects evidence of an established pattern, making record-keeping from year one essential. The interaction with annual exemptions is also relevant: s.21 is applied before the GBP 3,000 annual exemption under s.19, meaning premiums that qualify under s.21 do not consume the annual exemption.16

Section 102 Finance Act 1986: Gifts with Reservation

The gifts with reservation rules under s.102 Finance Act 1986 represent the most critical compliance risk in life insurance trust planning. Where a life policy is placed in trust but the settlor retains any benefit -- directly or indirectly -- the policy proceeds may be treated as property subject to a reservation and included in the settlor's estate on death, negating the trust structure entirely.17

The interaction between s.21 and s.102 demands particular attention. HMRC guidance at IHTM14432 confirms that premiums qualifying for the s.21 normal expenditure exemption may nonetheless be caught by the GWR rules if the settlor retains any benefit from the trust.18 The s.21 exemption addresses whether the premium payment is a chargeable transfer; the GWR rules address whether the gifted property (the policy) is treated as remaining in the settlor's estate. These are independent tests, and satisfying one does not satisfy the other.

The s.102(6) exemption applies only to policies issued before 18 March 1986. For all subsequent policies, advisors must ensure absolute exclusion of the settlor from any benefit under the trust, including indirect benefits such as the trust paying premiums on a policy that also covers the settlor's life where the settlor is a potential beneficiary.

3. Trust Structuring for Life Insurance

Why Trust Placement Is Determinative

A life insurance policy not written in trust forms part of the policyholder's estate on death. The claim value is included in the gross estate and is subject to IHT at 40% on the value exceeding the nil-rate band.19 Writing the policy in trust achieves two outcomes: the policy proceeds are excluded from the taxable estate, and beneficiaries receive funds directly from trustees -- typically within weeks of the death certificate submission -- without requiring a grant of probate.20

Consider a worked example. An estate comprises a main residence valued at GBP 650,000, investments of GBP 200,000, a pension fund of GBP 300,000 (included from April 2027), and a whole-of-life policy with a GBP 200,000 sum assured. Without trust placement, the gross estate totals GBP 1,350,000. Assuming the RNRB applies (residence to direct descendants) and a transferable NRB from a deceased spouse, the available threshold is GBP 1,000,000. The IHT liability on the remaining GBP 350,000 is GBP 140,000. With the policy written in trust, the gross estate reduces to GBP 1,150,000. The IHT liability falls to GBP 60,000. The net IHT saving from trust placement is therefore GBP 80,000. In addition, the GBP 200,000 trust payout reaches beneficiaries within weeks without requiring probate, providing immediate liquidity to settle the remaining GBP 60,000 IHT liability with GBP 140,000 available for distribution -- a significant timing and cash-flow advantage distinct from the tax saving itself.

Bare Trusts Versus Discretionary Trusts

Bare trusts provide fixed, irrevocable beneficiaries from inception. The beneficiary holds an absolute right to both capital and income. For IHT purposes, the trust fund is treated as part of the beneficiary's estate, which may create complications if the beneficiary predeceases the life assured. Bare trusts are administratively straightforward and do not incur periodic or exit charges under the relevant property regime. A transfer into a bare trust is treated as a gift to the beneficiary and qualifies as a PET under s.3A. They are appropriate where the identity of beneficiaries is certain and flexibility is not required.21

Discretionary trusts give trustees power to determine distribution timing, amounts, and recipients among a defined class of beneficiaries. They offer maximum flexibility but are subject to the relevant property regime: entry charges (where the value transferred exceeds the NRB), ten-year periodic charges (up to 6% of the trust fund value above the NRB), and proportionate exit charges.22 A transfer into a discretionary trust is a chargeable lifetime transfer, not a PET. For most life insurance trusts, the value of the policy during the insured's lifetime is the surrender value -- often nil for term assurance and minimal for whole-of-life -- meaning both the initial CLT charge and periodic charges are typically negligible until a claim arises. On a claim event, trustees can distribute proceeds promptly, before the next periodic charge date if desired.

Policies held in pre-22 March 2006 interest-in-possession trusts retain their original IHT treatment, with the trust fund treated as part of the life tenant's estate rather than falling under the relevant property regime.23

Joint-Life Second-Death Policies

For married couples and civil partners, joint-life second-death policies pay out on the second death, matching the typical IHT trigger point. The interspousal exemption means no IHT arises on the first death (assuming assets pass to the surviving spouse), making a first-death payout unnecessary for IHT purposes. Second-death policies command lower premiums than equivalent single-life cover because the insured event -- both lives ending -- is statistically less likely to occur early.

Advisors should consider trust structuring carefully for joint-life policies. The trust must be drafted to ensure neither life assured is a beneficiary, maintaining the exclusion of proceeds from both estates and avoiding GWR treatment.

Practical Structuring Considerations

The choice between assigning an existing policy into trust and establishing a new policy directly in trust has IHT implications. Assignment triggers a transfer of value measured by the s.167 minimum value (cumulative premiums less any surrender payments received). A new policy established directly in trust, with the first premium paid by the settlor, creates a transfer of value equal only to that first premium. Subsequent premiums may qualify under s.21 if the three conditions are met.

Trustees should be selected with care. The settlor should not be the sole trustee, and the trust instrument must include a letter of wishes providing guidance on distribution without creating binding obligations that could compromise the trustees' discretion under a discretionary trust. HMRC form D34 provides the reporting framework for trust transfers involving life insurance.24

4. Product Selection and Premium Risk

Whole-of-Life Versus Term Assurance

Whole-of-life policies guarantee a payout on death regardless of when death occurs, making them the primary product for permanent IHT liability cover. Term assurance covers a fixed period at lower cost and is appropriate for specific, time-limited exposures -- most commonly, seven-year term cover to protect beneficiaries against IHT on a failed PET or CLT that becomes chargeable if the transferor dies within the seven-year window.25

The product selection decision depends on the nature of the IHT liability. Where the liability is permanent (frozen thresholds, ongoing estate growth, pension inclusion), whole-of-life cover is appropriate. Where the liability is transitory (a specific gift subject to the seven-year rule), term assurance provides cost-effective cover without ongoing premium commitment.

Guaranteed Versus Reviewable Premiums: The Lapse Risk

The distinction between guaranteed and reviewable premiums on whole-of-life policies carries material planning risk that advisors must address at the point of recommendation.

Guaranteed premiums are fixed for the life of the policy. The initial cost is higher, but the policyholder has complete certainty over future expenditure. For estate planning purposes, guaranteed premiums also simplify s.21 compliance because the regular, fixed amount more readily satisfies the "established pattern" requirement.

Reviewable premiums offer lower initial cost but are subject to periodic review, typically after 10 years and every 5 years thereafter. At review, the insurer recalculates premiums to ensure the policy fund can sustain the guaranteed sum assured based on current assumptions (mortality, investment returns, charges). Premium increases at review can be substantial; industry practice indicates that where initial assumptions prove optimistic, premiums may increase significantly -- in some cases by multiples of the original amount.26

The estate planning risk is acute. A client who takes out a reviewable whole-of-life policy at age 55 may face premium reviews at ages 65, 70, 75, and 80. If premiums escalate beyond affordability, the policy lapses. No premiums are returned, no death benefit is payable, and the estate is left entirely unprotected at the point of greatest vulnerability -- advanced age, when securing replacement cover is either prohibitively expensive or medically impossible.

Advisors should document the rationale for premium type selection in their suitability report. Where reviewable premiums are recommended on cost grounds, the file should evidence that the client understands the review mechanism, the potential scale of premium increases, and the consequences of lapse. A cost-benefit analysis comparing the cumulative guaranteed premium against the projected reviewable premium trajectory over the client's expected planning horizon provides the evidential foundation for this recommendation.

Indexation and Sum Assured Adequacy

Level sum assured policies face inflation erosion over decades. An IHT liability estimated at GBP 200,000 today will be larger in 20 years if asset values continue to rise against frozen thresholds. Indexation-linked policies increase the sum assured annually (typically in line with RPI or a fixed percentage), with premiums increasing correspondingly. Advisors should model the projected estate growth and IHT trajectory to determine whether indexation is warranted, balancing the additional cost against the risk of under-insurance at claim.

5. The Section 21 Exemption: An Underutilised Opportunity

Establishing the Pattern

The normal expenditure out of income exemption under s.21 IHTA 1984 offers a powerful route for premium payments to achieve immediate exemption, without reliance on the seven-year PET survival period. However, advisors must ensure the three statutory conditions are met from inception.27

Condition 1 -- Normal expenditure: The payment must form part of the transferor's normal expenditure. HMRC guidance at IHTM14241 indicates that this requires a settled pattern or commitment. A single premium payment is unlikely to qualify. Regular monthly or annual premiums, maintained consistently, establish the pattern. The Bennett v IRC test requires only "substantial conformity" rather than mechanical repetition -- occasional missed payments do not necessarily disqualify the pattern, provided the overall commitment is evident.28

Condition 2 -- Made out of income: Premiums must be paid from income (taking one year with another), not capital. HMRC may scrutinise the source of premium payments, and advisors should ensure clients maintain clear records distinguishing income from capital resources. IHTM14250 confirms that "income" for these purposes is net income after tax, and that a surplus of income over expenditure in the relevant year or across multiple years is required.29

Condition 3 -- Standard of living maintained: The transferor must retain sufficient income to maintain their usual standard of living after making the premium payment. IHTM14255 indicates that this is an objective test based on what is appropriate for the transferor's circumstances, not a subjective assessment by the transferor.30

Record-Keeping and the GWR Interaction

Advisors should implement a record-keeping protocol from policy inception. This should include: annual income and expenditure summaries demonstrating the surplus from which premiums are paid; confirmation that the policyholder's standard of living has not been compromised; and a schedule of all premium payments with dates and amounts.

The critical caveat, warranting emphasis in every client communication, is the interaction with GWR rules. HMRC guidance at IHTM14432 confirms that a gift qualifying for the s.21 normal expenditure exemption may simultaneously be treated as a gift with reservation under s.102 FA 1986.31 The s.21 exemption determines whether the premium payment is a chargeable transfer. The GWR rules determine whether the settled property (the policy) is treated as remaining in the settlor's estate. An advisor who secures s.21 treatment for premiums but fails to exclude the settlor from trust benefits has achieved nothing: the policy proceeds will still be included in the estate on death.

6. Regulatory Context: FCA MS24/1 and Advisory Practice

The Protection Gap

The FCA's MS24/1 Pure Protection Market Study, launched in March 2025 with interim findings published in January 2026, provides regulatory context that directly shapes how advisors should approach life insurance within estate planning.32 The headline finding -- that 58% of adults hold no pure protection product, with 59% of those having never considered their protection needs -- underscores the scale of the advisory opportunity.33

The study found that 80% of new pure protection policies in 2024 were sold via intermediaries, with approximately 12,000 active intermediaries in the market. Total individual claim payouts reached GBP 4.85 billion in 2023, demonstrating the tangible value of protection when claims arise. However, 18-28% of customers reported compromising on policy choice due to affordability or health concerns, raising questions about whether advice processes adequately explore the full range of product options.34

Consumer Duty and Value Assessment

The FCA's concerns around indemnity commission structures, panel models, clawback arrangements, and potential for unnecessary switching are directly relevant to estate planning protection recommendations. Under Consumer Duty requirements, advisors must demonstrate that the recommended product delivers fair value relative to the client's specific needs and circumstances.

For IHT-motivated life insurance, this means the suitability assessment must evidence: the quantified IHT liability the policy addresses; the rationale for product type (whole-of-life versus term); the rationale for premium structure (guaranteed versus reviewable); and the trust structure selected. The MS24/1 interim findings, while not yet finalised (the final report is expected Q3 2026 with feedback invited until 31 March 2026), signal regulatory attention to protection distribution that advisors should anticipate in their compliance frameworks.35

The Advisory Opportunity

The intersection of expanded IHT exposure and the protection gap represents a significant practice development opportunity. Advisors who integrate protection advice systematically into estate planning reviews -- rather than treating it as an ancillary product conversation -- can address an identified client need while strengthening the evidential basis for the value of ongoing advisory relationships. A structured estate planning review that quantifies the IHT liability, models the liquidity position, and recommends appropriate protection in trust converts a regulatory obligation into a demonstrable service enhancement.

Conclusion

The reformed IHT landscape -- frozen thresholds through 2030-31, pension death benefit inclusion from April 2027, the residence-based regime expanding worldwide asset scope, APR/BPR relief capped from April 2026, and rising receipts forecasted to reach GBP 14.5 billion annually -- has elevated life insurance written in trust from a supplementary estate planning tool to a central component of effective IHT mitigation strategy. The legislative framework governing that interaction is precise: s.167 valuation rules, the distinction between PET and CLT treatment depending on trust type under s.3A, s.21 normal expenditure exemption, and s.102 GWR provisions each carry specific requirements that determine whether a trust-based life insurance arrangement achieves its intended IHT outcome. Advisors who master these mechanics, document their reasoning within Consumer Duty-compliant suitability frameworks, and address the reviewable premium lapse risk at inception will be positioned to serve the expanding cohort of IHT-exposed clients with the rigour that both regulation and professional duty demand.

CPD Declaration

Estimated Reading Time: 20 minutes Technical Level: Advanced Practice Areas: Estate Planning, IHT Mitigation, Protection Advice, Trust Structuring

Learning Objectives

Upon completing this article, practitioners will be able to:

  1. Analyse the combined impact of frozen IHT thresholds, pension death benefit inclusion from April 2027, and the residence-based regime on the population of IHT-exposed estates
  2. Distinguish between the s.21 normal expenditure out of income exemption and s.102 gifts with reservation rules as they apply to life insurance held in trust
  3. Evaluate the suitability of guaranteed versus reviewable whole-of-life premium structures within the context of long-term estate planning certainty
  4. Apply the three statutory conditions of the s.21 IHTA 1984 exemption to regular premium payments, incorporating the Bennett v IRC established pattern test

CII Competency Mapping

  • AF1 -- Personal Tax and Trust Planning: IHT liability calculation, trust taxation, and exemption application
  • AF5 -- Financial Planning Practice: Suitability assessment and Consumer Duty compliance for protection recommendations
  • R06 -- Financial Planning Practice: Client documentation and file evidence requirements

Reflective Questions

  1. How would you adapt your estate planning review process to identify clients newly exposed to IHT as a result of pension death benefit inclusion from April 2027?
  2. What additional documentation steps would you implement to evidence s.21 normal expenditure compliance from policy inception, and how would you ensure the GWR exclusion is maintained?
  3. In what circumstances would you recommend a reviewable premium structure over guaranteed premiums, and how would you evidence this recommendation within your suitability report?

Professional Disclaimer

The information presented reflects the regulatory and legislative position as of 2026-02-04. Regulations, tax rules, and professional guidance are subject to change. Readers should independently verify all information before acting and seek advice from appropriately qualified solicitors, financial advisors, or other professionals for their specific circumstances.

Neither WUHLD nor the author accepts liability for any actions taken or decisions made based on the content of this article. Professional readers are reminded of their own regulatory obligations and duty of care to their clients.

Footnotes

Footnotes

  1. HMRC Tax Receipts Monthly Bulletin (December 2025). https://www.gov.uk/government/statistics/hmrc-tax-and-nics-receipts-for-the-uk/hmrc-tax-receipts-and-national-insurance-contributions-for-the-uk-new-monthly-bulletin ↩

  2. GOV.UK -- Inheritance Tax Nil-Rate Band and Residence Nil-Rate Band from 6 April 2028 (October 2025). https://www.gov.uk/government/publications/inheritance-tax-nil-rate-band-and-residence-nil-rate-bands-from-6-april-2028/inheritance-tax-nil-rate-band-residence-nil-rate-band-from-6-april-2028 ↩

  3. HMRC Tax Receipts Monthly Bulletin (December 2025). https://www.gov.uk/government/statistics/hmrc-tax-and-nics-receipts-for-the-uk/hmrc-tax-receipts-and-national-insurance-contributions-for-the-uk-new-monthly-bulletin ↩

  4. GOV.UK -- Budget 2025 (October 2025). https://www.gov.uk/government/publications/budget-2025-document/budget-2025-html ↩

  5. GOV.UK -- Inheritance Tax on Unused Pension Funds and Death Benefits: Policy Summary (October 2024). https://www.gov.uk/government/publications/inheritance-tax-unused-pension-funds-and-death-benefits/inheritance-tax-unused-pension-funds-and-death-benefits ↩

  6. GOV.UK -- IHT on Pensions: Liability, Reporting and Payment: Summary of Responses (2025). https://www.gov.uk/government/consultations/inheritance-tax-on-pensions-liability-reporting-and-payment/outcome/inheritance-tax-on-pensions-liability-reporting-and-payment-summary-of-responses ↩

  7. GOV.UK -- IHT on Pensions: Liability, Reporting and Payment: Summary of Responses (2025). https://www.gov.uk/government/consultations/inheritance-tax-on-pensions-liability-reporting-and-payment/outcome/inheritance-tax-on-pensions-liability-reporting-and-payment-summary-of-responses ↩

  8. GOV.UK -- Agricultural Property Relief and Business Property Relief Changes (December 2025). https://www.gov.uk/government/publications/changes-to-agricultural-property-relief-and-business-property-relief/agricultural-property-relief-and-business-property-relief-changes ↩

  9. HMRC IHTM47020 -- Long-Term UK Residence Test (2025). https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm47020 ↩

  10. GOV.UK -- Inheritance Tax If You're a Long-Term UK Resident (2025). https://www.gov.uk/guidance/inheritance-tax-if-youre-a-long-term-uk-resident ↩

  11. IHTA 1984, s.167 -- Valuation of Life Policies. https://www.legislation.gov.uk/ukpga/1984/51/section/167 ↩

  12. HMRC IHTM20084 -- Claim Value Definition (2025). https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm20084 ↩

  13. IHTA 1984, s.3A -- Potentially Exempt Transfers. https://www.legislation.gov.uk/ukpga/1984/51/section/3A ↩

  14. IHTA 1984, s.21 -- Normal Expenditure Out of Income. https://www.legislation.gov.uk/ukpga/1984/51/section/21 ↩

  15. HMRC IHTM14231 -- Normal Expenditure Out of Income: Introduction (2025). https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm14231 ↩

  16. HMRC IHTM14250 -- Out of Income Condition (2025). https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm14250 ↩

  17. Finance Act 1986, s.102 -- Gifts with Reservation. https://www.legislation.gov.uk/ukpga/1986/41/section/102 ↩

  18. HMRC IHTM14432 -- Insurance Policies and GWR/Normal Expenditure Interaction (2025). https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm14432 ↩

  19. HMRC IHTM20012 -- Life Policies and IHT (2025). https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm20012 ↩

  20. GOV.UK -- Trusts and Inheritance Tax (2025). https://www.gov.uk/guidance/trusts-and-inheritance-tax ↩

  21. GOV.UK -- Trusts and Taxes: Trusts and Inheritance Tax (2025). https://www.gov.uk/trusts-taxes/trusts-and-inheritance-tax ↩

  22. GOV.UK -- Trusts and Inheritance Tax (2025). https://www.gov.uk/guidance/trusts-and-inheritance-tax ↩

  23. HMRC IHTM20202 -- Pre-2006 Trust Policies (2025). https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm20202 ↩

  24. GOV.UK -- Form D34: Inheritance Tax, Life Insurance and Annuities (2025). https://www.gov.uk/government/publications/inheritance-tax-life-insurance-and-annuities-d34 ↩

  25. HMRC IHTM20012 -- Life Policies and IHT (2025). https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm20012 ↩

  26. The claim regarding reviewable premium escalation reflects established industry practice for whole-of-life policies. Premium review mechanics are governed by individual policy terms rather than a single regulatory source. See HMRC IHTM20012 for the general IHT treatment of life policies. https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm20012 ↩

  27. IHTA 1984, s.21 -- Normal Expenditure Out of Income. https://www.legislation.gov.uk/ukpga/1984/51/section/21 ↩

  28. HMRC IHTM14231 -- Normal Expenditure Out of Income: Introduction (2025). https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm14231 ↩

  29. HMRC IHTM14250 -- Out of Income Condition (2025). https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm14250 ↩

  30. HMRC IHTM14255 -- Standard of Living Condition (2025). https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm14255 ↩

  31. HMRC IHTM14432 -- Insurance Policies and GWR/Normal Expenditure Interaction (2025). https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm14432 ↩

  32. FCA MS24/1 -- Pure Protection Market Study (March 2025). https://www.fca.org.uk/publications/market-studies/ms24-1-1-market-distribution-pure-protection ↩

  33. FCA MS24/1 Interim Findings Report (January 2026). https://www.fca.org.uk/publication/market-studies/ms24-1-4-market-study-distribution-pure-protection-products-retail-customers-interim-report.pdf ↩

  34. FCA MS24/1.2 -- Market Study Report (2025). https://www.fca.org.uk/publication/market-studies/ms24-1-2.pdf ↩

  35. FCA Press Release -- Closing the Protection Gap (2025). https://www.fca.org.uk/news/press-releases/fca-seeks-views-close-protection-gap ↩

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