Readers’ forum: Tax advice on life insurance

My client set up a whole of life insurance policy on his own life in 1992 with the policy proceeds in trust for the benefit of his then business partner.

The business partner died in 1999 and the insurance company has held the policy proceeds for my client absolutely since then. The current life cover is £450 000 and the annual premiums are about £3 600. The current cash in value of the policy is £30 000.

My client is now 70 and is in good health. He is planning to retire soon.

He has asked me for advice on what best to do in respect of the policy. I have told him that I cannot give investment advice. I have said that I will give him some limited taxation advice and I would welcome a steer from Taxation readers on the key points.

His main options appear to be:...