Life Insurance in Trust | 2026 Guide [Pros & Cons]

Q: What is life insurance in trust?

When you take out life insurance , you may be given the option to write your policy in trust. This is a legal process that allows you to transfer ownership of your policy to someone else or other people (trustees) and specify who you want the potential pay out to go to (beneficiaries). Life insurance in trust gives you better control over your policy and means you could avoid or minimise inheritance tax on the pay out, as its usually not considered part of your estate when you pass away.

Q: Is it worth putting joint life insurance in trust?

A joint life insurance policy covers two people at the same time and only pays out once if either person passes away during the term. It’s usually taken out by married couples or couples in a civil partnership who’d be exempt from inheritance tax if a claim was made. As a result, it’s not common for joint life insurance to be written in trust for inheritance tax purposes. However, in some cases, it can be beneficial. For example: Unmarried couples or couples who aren’t in a civil partnership may wish to put their joint policy in trust to ensure that when the first person passes away, the surviving partner will receive the pay out before other beneficiaries (such as children or parents) If both policyholders were to die at the same time (or within 30 days of each other) or the policy was joint survivorship life insurance (when a pay out is made on a second death basis), then writing the policy in trust will avoid inheritance tax for the beneficiary

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Writing life insurance in trust

What is life insurance in trust?
Should I put my life insurance in trust?
How does writing life insurance in trust work?
Life insurance in trust pros and cons
Why put life insurance in trust through Reassured?
Types of trust
How much does it cost to write life insurance in trust?
How to choose a beneficiary for life insurance in trust
How to choose trustees
Is it worth putting joint life insurance in trust?
Should unmarried couples put life insurance in trust?
How to put life insurance in trust
Life insurance in trust FAQs

Life insurance in trust [key highlights]

Writing life insurance in trust could help to avoid or minimise inheritance tax on the potential pay out
A trust gives you better control over who should receive the potential pay out, and when they should receive it
Loved ones could receive the pay out more quickly if a policy is written in trust
You can set up a trust any time after taking out your policy
Writing life insurance in trust has many benefits, however, it’s difficult to make changes to your policy or cancel the trust once it’s set up. You may wish to speak to a legal and/or financial advisor before going ahead
Reassured offer a free and simple online trust writing service with most of the policies we arrange. It takes just 5 minutes to complete our digital form.

What is life insurance in trust?

When you take out life insurance, you may be given the option to write your policy in trust.

This is a legal process that allows you to transfer ownership of your policy to someone else or other people (trustees) and specify who you want the potential pay out to go to (beneficiaries).

Life insurance in trust gives you better control over your policy and means you could avoid or minimise inheritance tax on the pay out, as its usually not considered part of your estate when you pass away.

We explain the benefits in more detail below...

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How does writing life insurance in trust work?

Writing life insurance in trust is a quick and simple process.

It involves completing a legal document (called a ‘trust deed’) after taking out your policy.

Here’s how the process works:

Choose your beneficiaries. These are the people who’ll receive the money in the event of a pay out. They can be family members, friends or a charity. If they’re under 18 years old, the trustees will need to look after the money until they turn 18
Choose your trustees. These are the people who will manage the policy on your behalf and distribute the pay out according to your wishes. A trustee could be a family member, friend or legal professional, but they must be over 18 and have a UK bank account. They can also be named as a beneficiary.
Fill in the trust deed. This document requires the details of your chosen trustees and beneficiaries, and how you want the pay out to be managed in the event of a claim. An ‘expression of wishes’ form is also provided if you wish also to specify how much each of your beneficiaries should receive and when they should receive it
Policy is transferred to trustees. Once the form is completed and the insurer sets up the trust, your policy will remain in the hands of the trust until it pays out or expires. The trustees legally own the policy after this point, so you’ll need to get their authorisation if you want to make changes
Continue paying premiums. It’s important to keep hold of the trust deed, communicate with your trustees about their role and continue paying your monthly life insurance premiums to keep the policy valid.

Reassured offer a range of policies that can be written in trust, including whole of life insurance, single or joint term life insurance and term with critical illness cover.

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Should I write my life insurance in trust?

Whether you should write your life insurance in trust depends on your own personal circumstances, but in many cases, it could be a good choice.

We’ve provided some pros and cons of writing life insurance in trust to help you with this decision, but if you need further information or advice you may wish to speak to a legal advisor.

Life insurance in trust pros and cons

Here are some of the advantages and disadvantages of putting life insurance in trust:

PROs of writing life insurance in trust

Avoid or minimise inheritance tax (IHT)
Life insurance not written in trust could be subject to 40% inheritance tax if your estate is worth above the tax-free threshold (£325,000) when you pass away. However, if your life insurance is written in trust, the pay out is kept separate from your taxable estate. This means you could avoid or minimise inheritance tax for your loved ones.
Many people take out life insurance to help pay an inheritance tax bill that’s expected on an estate. In this case, it’s important to write the policy in trust so that the value doesn’t affect your inheritance tax liability and beneficiaries receive the full pay out.
In the UK, 31,500 estates paid inheritance tax in 2022/23^[1]. The government website has more information on trusts and taxes if you’d like to learn more.
Could avoid probate for a faster pay out
Probate is a legal process that involves distributing assets from your estate after you pass away. Depending on the complexity of your estate and other factors, it can take days, weeks or even months to complete this process^[2].
If your life insurance policy is written in trust, the pay out is managed separately from your estate so that your beneficiaries could receive the funds more quickly. This could be particularly beneficial for helping to cover immediate costs, such as legal fees or funeral costs.
Have better control over who receives the pay out and when
Writing your life insurance in trust allows you to specify who’s entitled to receive the pay out, as well as when and how you want the money to be distributed. For example, if you’re looking to financially protect your partner but you’re not legally married, it could be beneficial to write your policy in trust and nominate them as a beneficiary. This will ensure that your partner is legally entitled to the pay out in the event of a claim.
Without a trust, your life insurance could be used for other purposes, like paying off debts, and your beneficiaries may not receive all the money you intended for them.

CONs of writing life insurance in trust

Can be difficult to cancel

Writing life insurance in trust is a legal arrangement that can’t be reversed if you change your mind. Also, if you wish to cancel your life insurance policy that’s written in trust, you may need permission from the trustees before doing so. It’s important to understand all the terms of the trust before deciding if it’s the right option for you.

Lose some control over your policy

Once a policy is written trust, any future decision regarding the policy will need to be signed off by the trustees. For example, if your circumstances change and you want to increase the pay out amount, or you want to add or remove beneficiaries, the insurer may only take this instruction from the trustees.

Why put life insurance in trust through Reassured?

Free life insurance quote comparison. Financial protection for your loved ones from just 20p-a-day^†
Top UK insurers. We work with some of the UK’s best life insurance providers, helping you to find our best deals
Quick & simple online trust writing service (available with most policies). It takes just 5 minutes to place life insurance in trust using our digital form
Fee-free expert support. Our experienced team are on hand to help answer any questions you may have and explain any confusing legal jargon
Customer service rated ‘Excellent’. We score 4.8/5 stars from over 90,000 Trustpilot reviews
FCA-regulated broker. Our award-winning service is regulated by the Financial Conduct Authority

Types of trust for life insurance

There are different types of trusts available to suit different needs. These include:

Absolute trusts
Survivor’s discretionary trusts
Flexible trusts
Discretionary trusts

Life insurance arranged through Reassured can only be written into a ‘discretionary’ trust, as described below.

Discretionary trusts key points

A flexible type of trust where you provide a list of potential beneficiaries and how much they should each receive from the pay out
Your chosen trustees can add or remove beneficiaries, as well as adjust how the pay out is split if circumstances change
A ‘letter of wishes’ can be included with details of how you wish the policy to be managed
Allows you to retain or gift away certain parts of your cover. For example, if you have life insurance with critical illness cover, then you may wish to retain the critical illness cover so that you can make a claim on your policy if you become critically ill

Our experts can provide information about the trust to help you decide if it’s the right option for you.

However, if you need advice on the different trust options, it’s important to speak to a financial or legal advisor.

How much does it cost to write life insurance in trust?

Aside from paying a monthly premium for your life insurance, putting a policy in trust is a free option through Reassured.

As a broker, we can talk you through the trust application process as part of our service, which doesn’t cost you anything. However, if you choose to seek financial advice, there may be a cost for this.

Life insurance arranged through Reassured starts from just 20p a day.

How much life insurance do you need?

How much life insurance in trust do you need? Work out your ideal cover amount by using our handy calculator.

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Your total cover estimate

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How to choose a beneficiary for life insurance in trust

You can choose one person or multiple people to benefit from your life insurance policy.

Most commonly, partners and children are named as beneficiaries. However, you can also name:

Grandchildren
Great-grandchildren
Friends
Parents
A charity

If you’d like to leave an inheritance to your future children, or grandchildren, then the funds would need to be held in the trust until they reach 18 (the age when they can legally benefit).

You can also choose how the pay out is divided up between your beneficiaries. For example, you could leave 50% to your partner and 50% to your children (totalling 100%).

How to choose trustees

A life insurance trust requires at least two trustees over the age of 18 to oversee the trust and manage your policy on behalf of your beneficiaries.

They can be:

Family members
Close friends
A legal professional (such as a solicitor)

You, as the policy holder, are automatically a trustee on your policy.

When choosing additional trustees, it’s important to think carefully about who will carry out this role as you’ll need to be able to trust them to do the right thing when you’re no longer around.

A trustee also needs to be:

A responsible person who understands their legal obligations and responsibilities when it comes to the trust
Reliable and easily contactable in the instance you need to make changes to the trust or if a claim is made on your policy

Is it worth putting joint life insurance in trust?

A joint life insurance policy covers two people at the same time and only pays out once if either person passes away during the term.

It’s usually taken out by married couples or couples in a civil partnership who’d be exempt from inheritance tax if a claim was made.

As a result, it’s not common for joint life insurance to be written in trust for inheritance tax purposes. However, in some cases, it can be beneficial.

For example:

Unmarried couples or couples who aren’t in a civil partnership may wish to put their joint policy in trust to ensure that when the first person passes away, the surviving partner will receive the pay out before other beneficiaries (such as children or parents)
If both policyholders were to die at the same time (or within 30 days of each other) or the policy was joint survivorship life insurance (when a pay out is made on a second death basis), then writing the policy in trust will avoid inheritance tax for the beneficiary

If you need guidance on whether to place a joint policy into trust, you should seek independent advice from a financial or legal advisor.

Should unmarried couples put life insurance in trust?

Yes, unmarried couples should consider writing life insurance in trust.

This because unmarried couples don’t have the same legal rights as married couples when it comes to life insurance pay outs.

If your policy is not written in trust, then the pay out will go to your estate when you pass away. Without a Will, your estate is then distributed to your closest living relatives as per intestacy law.

A cohabiting or civil partner has no claim on your estate (and thus, no claim on the life insurance pay out).

Therefore, putting your policy in trust could be a sensible option you want to financially protect your partner if you were no longer around.

In the UK today, there are around 3.6 million cohabiting couples^[5] – contributing to the increasing number of people who take legal action to claim their inheritance^[6].

How to put life insurance in trust

Most life insurance policies arranged through Reassured can be written in trust by filling in our simple online trust form.

Here’s how it works:

If the trust option is available with your policy, we’ll email you our digital trust form within 48 hours of your policy starting, along with clear instructions on how to complete the form.
As it’s a paperless service, there’s no need to provide a wet signature or print the form once it’s completed.
The information you provide will be reviewed by our dedicated trust writing team and we’ll confirm with you once the process is completed.

If you have any queries about our trust form, please contact us on: 0808 168 2025 between 09:00 - 17:00, Monday to Friday or email customer.services@reassured.co.uk.

As the UK’s largest life insurance broker^* , Reassured can help you compare multiple life insurance quotes from some of the UK’s biggest insurers to help you find a fantastic deal.

Simply get in touch for our fee-free, no-obligation comparison and trust-writing service.

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Writing life insurance in trust common questions

Is life insurance part of an estate?

Yes, as mentioned, life insurance is usually considered part of your estate if it’s not written in trust.

This means the pay out could be subject to inheritance tax and probate if you were to pass away during the policy term.

By writing your life insurance in trust, you can have peace of mind that the money is paid directly to your beneficiaries and not to your estate.

Do you pay inheritance tax on life insurance in trust?

No, one of the main reasons people choose to write their life insurance in trust is to avoid inheritance tax (charged at 40% on any amount above the tax-free threshold).

Writing your policy in trust transfers ownership of the policy to your trustees, so that it’s not considered part of your estate.

This ensures that your loved ones receive the full lump sum pay out after you’re gone, as per your wishes.

Can you put an existing life insurance policy in trust?

Yes, it’s possible to put an existing life insurance policy in trust.

If you’ve already taken out a policy through us and you’d like to place it in trust, then contact our customer services team on 0808 168 20 25 and we’ll arrange for a digital trust form to be emailed out to you (if your policy is eligible).

This removes the need for printing or posting and the form can be completed online in minutes.

In some cases, it may be necessary to hire a professional advisor or solicitor to help with writing your existing life insurance in trust.

What types of life insurance work best for avoiding inheritance tax?

If you’re looking at taking out life insurance specifically to help minimise or avoid an inheritance tax bill, then you may choose a policy that lasts for the rest of your life (rather than for a set term).

Whole of life insurance is available through our advised team at Reassured and starts from 27p a day^±.

Can a trustee be a beneficiary of the same trust?

Yes. Having a trustee who’s also a beneficiary of the trust is generally allowed and commonplace in family trusts.

However, where trustees are granted discretionary rights, it may be worth having at least one independent trustee who won't benefit from the trust.