Aegon launches integrated WOL trust policy

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Aegon UK has launched a Whole of Life plan which offers the ability to place the policy in a discretionary trust at application.

Aegon said it is the first company to offer this integrated trust process which limits the chance of delay or forgetting to do this once the policy is set up.

This integrated process also reduces room for errors as it's all done at the one stage.

In addition, if a customer is eligible for free cover and their adviser uses Aegon's integrated trust process, their free cover will also be placed in trust.

So if they were to die while Aegon was processing the application, any free cover wouldn't add to the IHT bill.

Other key features of the Aegon Whole of Life policy include:

  • Built in flexible options - a range of guaranteed insurability options and a gift inter vivos conversion option - so cover can change with customer circumstances
  • Joint life separation option - this means that if a policyholder was to divorce or dissolve a civil partnership, they could split the joint-policy into two single-life policies.
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The insurer said writing life policies in trust, which reduces the amount of tax paid from an estate in inheritance tax, is only done in 10% of cases across the industry at the moment.

Dougy Grant, protection director at Aegon said there is £530 million paid unnecessarily each year in IHT and Aegon wanted to help their customers to change that statistic.

Grant added: From an adviser point of view, we're clear on our target market - slightly older customers whose dependents will have an IHT liability on their death, people with a property worth more than the nil rate band. As it's designed for that target market, to offset that liability, we've maximised the likelihood of it being written in trust.

"If you had an IHT liability, the product is meant to offset that liability and we're writing it in trust. So rather than the application for the WOL policy and the application for the trust being separate and filled at different times, in most cases the policy being written in trust doesn't actually happen. We believe few policies do get written in trust and we wanted to minimise that so the application for the trust and the policy are wrapped up as one. The free cover that you get while underwriting is written in trust as well."

 

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