How is inheritance tax calculated for life insurance?
Inheritance tax is usually charged at up to 40% of the net value of your estate that exceeds the allowable threshold and can include gifts made during your life. For the year 2023/24 the inheritance tax threshold is £325,000 per person. You can pass any unused allowance to your spouse when you die so the personal inheritance tax allowance can be as much as £650,000 if your spouse doesn't use their allowance and instead passes this onto you.