Quick guides

Here we give you a general overview of the way tax could affect your life insurance pay-out. Remember, though, that everyone's tax situation is different, so you should talk to your adviser for more details about your own tax position.

Tax rules for life insurance

Under current tax rules, pay-outs for critical illness, terminal illness and life claims are usually free of personal liability to pay income tax and capital gains tax. However, in some circumstances your pay-out may be subject to inheritance tax. You can normally help avoid this by writing your death benefit in trust. Bear in mind that the law relating to tax may change in the future.

Protecting your pay-out from inheritance tax

Putting your life insurance plan in trust means that any life cover pay-out will go to the people you choose. This can remove the asset from your estate and you can appoint your own trustees to deal with the pay-out.

There are several advantages to doing this. Firstly, your chosen trustee(s) could receive the pay-out more quickly and easily. And secondly, under current tax rules, it could help protect the pay-out from inheritance tax. If you think your loved ones could benefit from putting your life insurance plan under trust, talk to your adviser about which trust is the most suitable for you.

Talk to one of our advisers

At Aviva, we have a team of specialist advisers who can answer your questions and help you choose the right product. We can only advise on our own products.

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WC05104 04/2012