Royal London has launched a joint life second death life cover option, as the subject of inheritance tax continues to be a key focus for advisers and clients.
The option, available on Royal London’s Personal Menu Plan, is designed to offer a cost-effective alternative to whole of life cover for those with potential IHT liabilities. This includes affluent or high net worth individuals over the age of 40 who generally possess substantial assets but have limited liquidity.
Joint life second death provides a payout on the second person covered if they die or are diagnosed with a terminal illness, during the term of the cover up to age 90. The option is already provided within Royal London’s whole of life plan and is now available on its term life cover.
The cover also features a gifting option, enabling assets given to the family during the person’s lifetime to be protected. Individuals can make lifetime gifts, carving out a portion of the sum assured with a separate “gift inter vivos” policy to insure against the cost of them dying within seven years of the gift after which the asset passes tax-free. Royal London said there is no need for medical re-underwriting when using the gifting option.
The launch comes at a time when inheritance tax finds itself in the spotlight. A combination of rising property prices and frozen tax thresholds, along with the Chancellor’s recent decision to include pensions and pension death-in-service benefits within estates for IHT from April 2027, means more estates will be dragged into paying IHT in the future.
Jennifer Gilchrist, protection expert at Royal London, said: “Over time, more and more people could face a liability when passing on assets to their next of kin. It also means that life insurance policies will become more popular for those facing large liabilities. Incorporating life insurance into estate planning allows clients to ensure assets are managed according to their wishes.”
While some of the changes won’t impact until April 2026 and beyond, Royal London said its proposition was coming at “the right time”, helping to assist advisers reviewing existing clients’ circumstances and filling any gaps in their existing provisions.
Ben Backhouse, founder of Risk Assured, added: “When it comes to planning for an inheritance tax liability, clients want reassurance and certainty that assets can be passed to their loved ones, according to their wishes. Royal London’s new joint life second term assurance is a welcome addition for high net worth clients looking for solutions in a market with a limited number of providers.”
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