Gift Inter Vivos Insurance Explained

When a gift is made between two people it would be considered part of the donor’s estate if they died within seven years of the gift being made. This would make the amount gifted liable for IHT. The Gift Inter Vivos is a seven year decreasing term assurance policy for which you pay a single
premium at the outset.

The sum assured decreases to mirror the Government’s IHT regulations and offsets the IHT liability on any gifts you have made, paying out a guaranteed, tax-free lump sum if you die during the policy term. The policy cannot be written on a joint life basis. The IHT bands that the policy is structured to pay out at are as follows:

Gift and Death     Charge Applied
1-3                           100
4                               80
5                               60
6                               40
7                               20

Notes (A gift is the transfer of an asset such as property or money etc from one person to another where no payment of any kind is given by the receiving person to the donor. Your estate is the total value of your possessions in whatever form they take.)