Should Your Life Insurance Policy Be Written In Trust?

According to one of the largest UK life insurance companies, just 1% of life policies are written in trust. That is disgraceful and reflects poorly on the financial industry. Let's explain. If your life insurance policy is "Written in Trust" then, in the event of a claim, the insurance company pays out directly to the beneficiaries you name on the policy. The significance of this is easily missed. It means that if the policy is "Written in Trust", the proceeds from the policy never form part of your legal estate and are not subject to Inheritance Tax. The importance of this is illustrated by the following figures: Take Mr A. He's a widower and wants to leave everything equally to his two sons. He owns his home which is currently worth