Mutual provider and insurer Royal London has launched a joint life second death life cover option to help clients with their estate planning and inheritance tax mitigation.

The option is designed to offer a cost-effective alternative to whole of life cover for those with potential IHT liabilities, the firm said.

Joint life second death cover provides a payout on the second person covered if they die or are diagnosed with a terminal illness during the term of the policy, up to age 90.

The option is already provided through Royal London’s whole of life plan and is now available on its term life cover.

The cover also features a gifting option, allowing assets given to the family during the individual’s lifetime to be protected, the company said.

Individuals can make lifetime gifts, carving out a portion of the sum assured with a separate ‘gift inter vivos’ policy to insure against the cost of them dying within seven years of the gift, after which the asset passes tax-free. There is no need for medical re-underwriting when using the gifting option, Royal London said.

The company warned that rising house prices and frozen tax thresholds, alongside the decision to include pensions and pension death-in-service benefits within estates for IHT from April 2027, will mean more estates will fall into the taxable bracket for IHT unless action is taken.

Jennifer Gilchrist, protection expert at Royal London, said: “The subject of inheritance tax will continue to be a focus for advisers and their clients as the application of IHT to pensions and business and agricultural property, as announced in the Budget, challenges the Financial Planning mindset and leads to a radical re-think for estate planning.”

She warned that more and more people could face a liability when passing on assets to their next of kin over time.

Ms Gilchrist said: “While some of the changes won’t impact until April 2026 and beyond, our new proposition is coming at the right time, helping to assist advisers reviewing existing clients’ circumstances and filling any gaps in their existing provisions.”