Life Policies: policy on the deceased’s life not connected with any other transaction (except a trust): policy unconnected with a gift or trust: introduction
Where the deceased is the life assured and the policyholder, the proceeds of the policy will form part of their estate (IHTM04043) at death. The value transferred will be the claim value (IHTM20084) as at the date of death and subject to a possible discount (IHTM20212) in certain circumstances to produce the open market value (IHTM20083) required by IHTA84/S160.
These policies should be shown in box 2 of form IHT410, and the procedure for dealing with them is set out at IHTM20022.
In most cases the policy will provide that the insurance company may postpone payment until it has proof of the age of the life assured, the death of the life assured and the title of the claimant,. This is usually sight of the Grant of Probate or Letters of Administration, or Confirmation (Scotland).
No discount from the date of death claim value should be allowed because these formalities have to be complied with. Inheritance Tax is payable on the open market value at that date and the hypothetical vendor must be assumed to have obtained a grant of representation and the death certificate.