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Life Insurance Policy Trust
Avoid delay in insurers paying out in event of death & tax issues.
The Truth About Trusts
Less than 10% of all life insurance policies in the UK are written into TRUST, and that is because most people who have life insurance are not aware of what a TRUST is and how important it is.
At The Insurance Helpline we provide this service to all customers FREE OF CHARGE.
What is a trust?
Put simply, a TRUST allows you to legally nominate the beneficiaries of your life insurance policy in the event of your death.
If you do not write your policy into TRUST then the insurer will not pay out the money until they receive a ‘court order’ stating who is to be paid this money and obtaining this ‘court order’ can easily take up to 2 years or longer.
How trusts work
When you take out life insurance, you simply complete a TRUST form for that specific insurer and you will nominate TRUSTEES (the people who raise the claim and look after your money) and BENEFICIARIES (the people who you want the money to be paid to such as wife, husband or children).
When you pass away during the term of your policy your Trustees will raise the claim with the insurer (or they can contact us and raise the claim). Once the death certificate is provided to the insurer the sum assured in your policy will be paid out into the Trustee's bank account. The Trustee is legally bound to pay off any mortgage liability and then remainder fund is distributed to adult Beneficiaries. For minor beneficiaries the Trustee opens bank accounts under the names of the children until they reach adult age. The entire process only takes 2-3 weeks after your death. There is no ‘waiting around’ for court dates, probate and legal proceedings.
How to avoid inheritance tax
Apart from the fact that it massively speeds up the payout, writing your policy into TRUST will also mean that the payout is 100% tax free and not subjected to inheritance tax.
Many people write their life insurance policies into their WILL, but this is not advisable, because this will mean that the payout from the policy forms part of your estate and will then be subjected to inheritance tax, and this should be avoided at all costs.
