Pegasus is rolling out a new whole of life contract targeting clients looking to insure their inheri...
Pegasus is rolling out a new whole of life contract targeting clients looking to insure their inheritance tax liability. The Wealth Preservation Plan is a unit-linked, non-qualifying contract that provides whole of life cover on a single life or joint life last survivor basis.
While the IHT liability can be covered by a conventional whole of life policy the product has been launched with features specifically tailored to this market.
Nick Kirwan, product development manager at Pegasus, said that with a focus on healthcare and family protection, the group's standard whole of life product was less suited to the IHT market. He added: "This new product has a number of technical differences that makes it ideal for inheritance planning."
Maximum age at entry is 85 next birthday compared with 70 on the standard product. For joint life cover one spouse must be under 85. Kirwan said: "This means we can now take on a couple aged 84 and 87, for example." A couple of this age would usually have no interest in family protection, and as a result Pegasus has not included features designed for this market that can be found in its standard whole of life contract.
A terminal illness benefit, for example, is not available on the Wealth Preservation Plan as the capital will only be needed on death. Kirwan said: "We have taken out the terminal illness benefit but have replaced it with other customer benefits. These include guaranteed insurability options designed with inheritance tax customers in mind."
One option allows policyholders to increase their sum assured if their assets grow at a faster rate than expected. "We can increase the sum assured by up to 10% so the policy keeps up with the increasing tax liability," said Kirwan.
Likewise, policyholders can also increase their cover if legislative changes increase their liability, for example, a reduction in the nil rate band for inheritance tax.
Kirwan added: "Inheritance tax planning is a huge market. Despite increases in the nil rate band over the years, rising house prices and an increase in personal wealth has meant that many people are caught in the inheritance tax trap - last year alone £1.9bn was paid by 18,000 families. It is not just the money that is the problem - very often the heirs have to sell the family home and treasured assets to pay the bill."
l Pegasus has also launched a pilot scheme on its personal critical illness policy that will enable claimants to have their benefits paid in instalments rather than as a lump sum.
Kirwan said: "The principle is that if the customer would prefer an income, we will enhance their sum assured and pay it in instalments." The option is available for new and existing policyholders and the pilot will run for six months. Kirwan said that if the concept is welcomed by IFAs and policyholders the feature will be made permanent. Following a revision to its application process all new Pegasus CI policyholders will also be covered as soon as they have signed the application.
