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Direct buyers face IHT blow

Consumers who have bought protection products direct and then placed them in trust are being warned that they could face a future inheritance tax hit following the Budget changes.

Sesame head of propositions and commercial development Alastair Conway says there is a very high likelihood that these consumers will need advice following the Chancellor’s attack on trusts.

He warns that any cost savings could be stripped away for people who now seek advice but those who do not get help may face tax bills further down the line.

Conway says: “If you have bought a life policy from a supermarket and you need to now reconsider your situation on trusts, who is going to advise you? Tesco?

“There is also a risk that the customer might end up paying out twice whereas if they had sought advice in the first place that is not an issue.”

Alpha to Omega chief executive Stewart Wooles says adv-ised sales ensure that consumers’ needs are better met and warns that price should not be the determining factor.

Wooles says: “If it is all about price, why doesn’t everyone drive a Yugo or buy own-brand baked beans? Consumers must consider their needs and buy accordingly.

“Regardless of the cheap cost of mortality-based cover, a consumer’s needs might mean they are better suited to an income protection product or should consider critical-illness insurance. Only advisers can offer this guidance.”

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