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The benefit of writing life insurance into trust

I often meet with clients who have bought life insurance maybe off the internet, from another adviser or from the bank years ago. Quite often, I see that policies are not written into trust, so what does that actually mean ?

I recommend writing an insurance policy into trust as you are never going to benefit from it and so by writing it into trust, the benefits will be passed on to someone else, whether that be your spouse, your children or your business partner.

I recommend it, as it is a fast pay out. What I mean by this, is that it doesn’t go into your estate and therefore avoids probate which can be costly and can delay payments.

I have seen situations where the payout from a policy, hasn’t been made for months and months, which can be difficult if your spouse has a mortgage and wants to pay it off quickly.

By writing into trust, payment is usually made within 2-4 weeks and so it avoids a lot of delays and further costs from a probate point of view. Also, policies that are written into trust don’t fall into your estate for inheritance tax purposes.

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