Pictured above: Andy McQuillan 

Dains, Midlands based Chartered Accountants and Business Advisers are warning Joint Life Insurance Policy Holders to check the position in relation to tax breaks.

When taking out a life insurance policy, it is relatively easy to word it so that any payout will escape Inheritance Tax (IHT) - but with joint policies this can be more difficult, meaning the tax break may not apply.

This may be the case either when the couple concerned are joint tenants-in-common or joint beneficial owners, where when the policy pays out it becomes part of the deceased's estate and therefore liable to IHT.

For policies where the survivor has a contractual right to the full value of the property from the moment the other dies, there is no value in the policy until one of them dies, and therefore IHT cannot be charged.

Andy McQuillan, Tax Partner at Dains said "In reality, many people will not be aware of which category their life insurance policy falls into and will not be in a position to determine the precise wording.  

"An alternative may be for both partners to consider taking out single life insurance policies rather than a joint one. Financial and tax advice should be taken. Single policies may not be significantly more expensive, and are easier to put 'in trust' for the benefit of the other partner, or other beneficiaries such as the couple's children. This option also allows the couple to select different levels of cover, if appropriate".