Writing Your Life Insurance Policy in Trust

Taking out a life insurance plan can guarantee a large and welcome payout for your family in the event of your death. Placing your policy within a suitable life insurance trust ensures swift and straight forward payment to your dependants avoiding lengthy delays and interest from the tax man.

Without a trust the payout on death will be added to the value of your estate and subject to any inheritance tax.  Eventual payment can be delayed waiting for a legal process called probate to determine who gets what. This can take up to six months, and sometimes longer if you don´t have a legally valid Will.

When a life insurance trust is not appropriate

1. Where the policy is to be assigned to a third party as security for a mortgage or other loan.
2. Whenever you take out a plan jointly and the intention is that both, or the survivor, should receive the benefit. This is why a joint life first death plan should not normally be put in trust.

Frequently asked questions

Q. Is there any cost to writing a life insurance policy in trust?

A. No, there is no charge for writing your policy in a life insurance trust.

Q. How do I arrange a suitable trust?

A. Your life insurance application form will ask if you wish to register your plan under a trust. The insurance company will send you a trust deed form and help you set up and register your plan against it.

Q. Are there any disadvantages to writing a policy in trust?

A. No, it is simply a safeguard to ensure your beneficiaries receive any payout quickly and without a tax bill attached.