A life insurance policy has come to light on an estate I have been dealing with. The deceased was a ‘life assured’ but not the policy owner of a life policy. The policy owner is her mother who is still alive and the policy continues until her mother’s death. No monies have been paid out on the death of the deceased client’s estate I am dealing with.
I have checked the HMRC manual on life polices but it only seems to cover the situation where the policy is owned jointly. The sums in question are considerable but I am struggling to ascertain if the value forms part of the estate I am dealing with. I am struggling to see how it could as the deceased didn’t actually own the policy.
If anyone has any definitive authority on this they could share I would be grateful before I succumb to spending an afternoon on hold to HMRC.
It sounds like the policy would not form part of the estate of the deceased for the exact reason you state. The policy would continue until the last life assured dies.
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It is the policyholder who “owns” the life policy (not the life insured). On the death of the policy holder the value of the policy forms part of the policy holder’s estate.
The policy proceeds do not form part of the estate of the life assured on their death.
I have assumed policy holder and life assured are different persons.
Typically, multiple lives are insured which prevents termination of the policy on the death of the policyholder.