WHAT HAPPENS TO YOUR ISLE OF MAN LIFE LINKED POLICY IF YOU DIE BEFORE ITS MATURITY.

This explains the importance of understanding the ownership of your policy and of making a will.

A. SINGLE OR JOINT OWNERSHIP?

If you and your spouse/partner/friend/relative are joint owners of your policy then if one of you dies, the policy automatically becomes owned fully by the survivor upon presentation of the death certificate to FPI.

If you wish to add your partner then you need to complete the necessary form

If you and your partner are joint owners of your policy but only one of you is the life assured, then if the life assured dies the plan will terminate and pay out to the survivor. If you are both life assured, then it will continue unchanged with the survivor becoming the 100% owner.

B. DEATH OF ALL OWNERS

The Isle of Man recognises wills made in other jurisdictions. If you die whilst being the sole owner of your plan or if both the owners die then the executor of your will must present either:

(a) the original will and a registry-issued certified copy of the death certificate; or
(b) a copy of the Grant of Probate made in the place where the deceased was domiciled when they died, together with a copy of the will, both sealed and certified by the issuing Registrar. Providing a Grant has been sealed to the deceased's will in the country of their domicile and the will has been written in English it is likely that Manx Probate would be granted.

If you die without a will, then things are more complicated, your heirs will have to appoint a legal representative to apply for an administration order from the Isle of Man court for Manx Probate. This would determine who would benefit under the intestacy rules of the domicile of the individual(s) and the proof for FPIIFS would be in the letters of administration. It would be for the heirs of the deceased to obtain letters of administration and not FPIIFS. The legal representative will be responsible for receiving and distributing the proceeds.

Information leaflet on probate written by the Manx Government

C. SUCCESSION TRUST

To avoid the problems of not having a will and to simplify them even if you have a will, you can assign your policy into a Succession Trust. This is a very simple trust whereby the owner(s) of the policy are the settlors and the trustees. This means that they still have full control and benefit of the policy whilst alive. However it is necessary to appoint an additional trustee in case both husband and wife die together. This can be a person or company of your choosing such as a friend, solicitor or accountant etc. If a professional trust company is requested to be trustee it is likely they will wish to be sole trustee. Remember that once a policy is assigned to a trust, all the trustees must sign any change or withdrawal to the policy.

The policy holder then becomes the trustees, but the lives assured do not necessarily change. Once all the lives assured die, the policy is terminated and the proceeds are paid to the trust for the beneficiaries. It is possible to add more lives assured whilst one or more of the existing lives assured are living (not after they have all died as the policy terminates at that point), such as children, so that the policy can continue for them in the trust and does not have to cease. However adding a life assured if they are UK resident will trigger a chargeable event for tax purposes