Should I put life insurance in trust?

Putting (or writing) your life insurance in trust is a way of making the most out of your policy for the financial benefit of your loved ones.

Surprisingly, around only 13% of policyholders have written their life insurance in trust[1]. Yet doing so can have some great advantages. These include:

  • Avoid or minimise inheritance tax (IHT) and maximise the pay out
  • Avoid the lengthy probate process and speed up the pay out
  • Have better control over who receives the pay out and when

At Reassured, we can provide a FREE trust writing service with most of the policies we sell. Simply ask if we can write your chosen policy in trust.

You can also use our award-winning service to compare free life insurance quotes from our panel of top UK insurers to find a great deal.

In this guide, we explain everything you need to know about putting your life insurance in trust (without too much jargon). Topics include:

As of June 2023, Reassured has helped more than 12,000 people write their life insurance in trust and take control this important asset.

Make the most of our award-winning broker service to compare life insurance quotes, save money and secure the financial future of your loved ones.

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 free option which allows you to specify who’ll benefit from your policy (the beneficiaries) in the event of your death.

A trust is a legal arrangement where certain people (the trustees) are given your permission (the settlor) to manage the policy on behalf of your beneficiaries.

You'll complete the document online which sets out the rules of how you wish your life insurance to be distributed.

When you pass away, it’s the trustees’ responsibility to claim on your policy and ensure the beneficiaries receive the funds as instructed - whether that be upon your death or at a specified time.

Trust terminology

Settlor: The person/s (policyholder/s) who sets up the trust and decides how the policy is managed. They will also continue to pay the monthly premium.

Trustees: The people who legally own the trust and manage the policy according to the settlor’s wishes. They can be a legal professional, family member or friend.

Beneficiaries: The person/s who will benefit from the trust on a date specified by the settlor. They can be family members, friends, or a charity.

When life insurance is written in trust, you’re essentially handing over ownership of your policy to someone else, which means it’s no longer considered part of your estate.

This has several valuable benefits, which we explain in more detail below…

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.


£137,934 is the estimated mortgage debt per household in the UK.

The purchase of a home is likely to be the largest financial commitment any of us will make in our lifetime. Your life insurance should cover your remaining mortgage balance to allow your loved ones to stay in the family home should anything happen to you.



The average monthly household budget in the UK is £2,548 (that’s £30,576 per year), which is spent on transport, food & drink, utilities (gas, electricity, water etc), clothing, council tax and leisure activities.

With energy prices hitting a record high and the cost of living rising sharply in the UK, you may wish to factor in utility bills and family living expenses into your cover.



The average personal debt of UK adults has risen to £34,566 (not including mortgage debt), with credit cards, personal loans and overdrafts being the most common forms of debt.

Factoring in any debts into your life insurance cover means that, if they need to be paid back from your estate after your passing, your loved ones won’t miss out financially.



According to SunLife, the average cost of a funeral in the UK is £3,953 (with the overall cost of dying at £9,200).

Funeral costs have increased by 116% since 2004 and are a significant cost which should be factored into the amount of life insurance you secure.



When factoring in cover for your children, you may wish to calculate the amount based on how long it is until they reach financial independence.

This could include childcare (£7,000 per year for part-time care), school expenses (£1,519 per school year for uniforms, lunches, stationary etc), as well as an additional sum for further education (this could be a contribution of up to £5,000 per year).

Sources:, &


2 in 5 adults say they are relying on an inheritance to fund their retirement.

Factoring in an inheritance to your sum assured could allow loved ones to live a more financially comfortable life. Alternatively, you could leave a cash gift to a charity of your choosing.



If you’re lucky enough to have your own savings or are part of the 30% of UK residents who already have a life insurance policy in place, this can provide financial protection for loved ones.

By entering your current cover, savings or death in service amount you can reduce the sum assured you require.


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Why put life insurance in trust?

Icon green tick Avoid or minimise inheritance tax

Putting your life insurance in trust is an important consideration if you have a large estate - which includes any money, possessions, and property you own at the time of your passing.

If your total estate is valued over £325,000, then your loved ones would be liable to pay inheritance tax on the amount above this threshold. The standard inheritance tax rate in the UK is 40%.

When life insurance isn’t written in trust, it forms part of your legal estate and is subject to inheritance tax, which can potentially reduce the sum paid out to your loved ones.

In some cases, if you were to secure a significant pay out amount, this could easily push the value of your estate above the tax-free threshold.

Many people put their life insurance in trust to avoid or minimise the amount of inheritance tax their loved ones will have to pay, or to help them pay a tax bill on the rest of the estate.

This ensures they’ll receive a larger inheritance.

In 2019/2020, UK estates worth between £300,00 and £500,000 paid on average £27,100 of IHT[2] and 23,000 of all UK deaths (612,000) resulted in an IHT charge[3].

Icon green tick Avoid the probate process

Probate is a legal process that involves distributing your estate after you pass away. In England and Wales, it takes between 9 and 12 months on average to complete[4].

If your life insurance is written in trust, your policy will be dealt with separately from your estate, so your loved ones won’t have to wait for probate to receive the pay out.

Once the death certificate is produced, your trustees can make a claim and the funds could be available within a matter of weeks.

This is particularly beneficial if your loved ones will need some help covering immediate costs after you pass away, such as legal fees or funeral costs.

Icon green tick Better control over your policy

If your life insurance isn’t put in trust, the pay out funds could be forced to pay off outstanding debts, rather than going to your loved ones as intended.

Writing your life insurance in trust allows you to take more control and specify who you wish to receive the pay out, as well as when and how you want it distributed.

For example, if you have young children as your beneficiaries, writing your policy in trust allows you to instruct your trustees to keep control of the funds until your children reach a certain age, such as 18 or 21.

Co-habiting couples who have single life policies in place will also benefit from writing their policy in trust, as not doing so won’t give their partner any legal right to receive the pay out funds if a claim is made.

What are the disadvantages of putting life insurance in trust?

While there are lots of advantages to writing your life insurance in trust, there are some disadvantages to consider.

The drawbacks of this option include:

  • In some cases, it can be difficult to cancel the trust once it’s set up. It’s important to understand all the terms of the trust before deciding if it’s the right option for you
  • 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 your pay out amount, the insurer will only take this instruction from the trustees
  • Some types of trusts are less flexible than others. With an ‘absolute’ trust, you won’t be able to change the named beneficiaries if your circumstances change

For more information on the potential disadvantages of writing your life insurance policy in trust, get in touch with Reassured.

One of our experts can run you through the pros and cons to help you decide if this is the right option for you and your family.

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

Putting your life insurance in trust doesn’t cost you anything. It’s a free service provided by most insurers.

As a broker, we’re trained to talk you through the trust application process. Our service is also offered completely free of charge.

However, trusts can sometimes be a complex process and if you choose to seek further financial advice, there may be a cost.

Please note, our trust service will never advise you on what to do. Although, we will provide you with enough information to help you make an informed decision.

To date, the trust team at Reassured has helped more than 12,000 customers put their life insurance in trust.

Types of trust

There are different types of trusts available, the one that’s right for you will depend on the type of life insurance you have chosen and how much flexibility you’d like.

Absolute trusts (sometimes known as 'Bare' or 'Fixed' trusts)

  • This option gives you (the settlor) the most amount of control
  • You name the beneficiaries when you set up the trust
  • You decide how the pay out is split between beneficiaries
  • Your decisions cannot be changed at a later date

Survivor’s discretionary trusts

  • A type of trust which contains a ‘survivorship option’ for joint life insurance policies
  • Enables a surviving joint policyholder to benefit from the policy before other beneficiaries
  • Can be ideal for couples who aren’t married

Flexible trusts

  • You name the beneficiaries, (known as the 'default' beneficiaries)
  • You can also name 'potential' beneficiaries, (like future grandchildren)
  • The trustees have the ability to change the default beneficiaries
  • The trustees can change the pay out split between default and potential beneficiaries to meet your wishes
  • This is a good option if you think your circumstances may change, but gives you less control over who receives the pay out

Discretionary trusts

  • The most flexible trust option, as there are no named default beneficiaries
  • You provide a list of potential beneficiaries but give trustees total discretion as to who'll benefit and how much they'll receive
  • A discretionary trust also allows the addition of potential beneficiaries
  • However, you (the settlor) have no overall control over who gets the pay out - it's down to the trustees
  • You can send a 'letter of wishes' detailing how you would like the pay out split, but there's no legal obligation for the trustees to adhere

Some insurers also offer a ‘split trust’ for some policies. This gives you option to split your potential pay out between your policy and the trust, allowing you to retain some of the cover included with your policy.

For example, if you have life insurance with critical illness cover, or free terminal illness cover included as part of your policy, you can still make a claim if you become ill.

At Reassured, we can offer a universal digital trust form to most policies we arrange. The universal form is flexible and allows you the option to split the trust, specifying which benefits you wish to gift and which you wish to retain. This trust provides you with the most flexibility.

Make the most of our fee-free service to learn more about each option. Our experts can help you decide which may be the best option for you and your loved ones.

How to choose beneficiaries

You can choose one person or multiple people to benefit from your life insurance policy if you were to pass away during the term.

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

  • Grandchildren
  • Great-grandchildren
  • Friends
  • Parents
  • A charity
How to choose life insurance beneficiaries

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 (when they can legally benefit).

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

With flexible and discretionary trusts, trustees have the power to add and remove beneficiaries, as well as decide how and when the pay out is distributed.

How to choose trustees

You’ll need to choose at least two trustees over the age of 18 to oversee the trust and manage your life insurance policy on behalf of your beneficiaries.

They can be:

  • Family members
  • Close friends
  • A legal professional
    (such as a solicitor)
How to choose life insurance trustees

With some types of trust, you can nominate yourself as a trustee, which allows you to keep some control over your policy and what happens to the trust while you’re living.

When choosing additional trustees, it’s important to think carefully about who will carry out this role. Some things to consider:

  • The age of your trustees. They’ll need to be young enough so that they’re likely to outlive your policy and be around to distribute the funds when the time comes. Especially if your beneficiaries are children or grandchildren under the age of 18 - it may be many years before the trustees are retired from their duties
  • How trustworthy they are. Trustees will be able to make decisions about the trust and how it’s distributed after you’re gone. It’s important that you can trust them to do the right thing when you’re no longer around
  • How reliable they are. Choosing someone who lives locally and who’s easily contactable may be sensible, to prevent any delays if changes need to be made to the policy while it’s in place
  • How responsible they are. Trustees need to be responsible enough to manage the trust properly. They’ll have important obligations and duties to carry out. Trustees are also responsible for keeping the trust document safe until the trust pays out

In some circumstances where a trustee is not following the terms of the trust document, it’s possible to request that they’re removed.

Can a trustee be a beneficiary of the same trust?

Yes. Having a trustee who is also a beneficiary of a 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.

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 when the first person passes away.

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 are not 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

Joint life insurance can be a good option for couples who wish to save money on their life insurance premiums.

However, if one partner passes away during the policy term and a pay out is made, it leaves the surviving partner without any cover.

Taking out two separate policies written in trust will ensure that your children or other dependents will still receive an inheritance after you’re gone.

Should unmarried couples put life insurance in trust?

Unmarried couples don’t have the same legal rights as married couples, which can pose some issues when it comes to life insurance pay outs.

If your life insurance is not written in trust and you don’t have a Will, then the proceeds from your policy will go to your estate when you pass away.

Your estate will then be distributed to your closest living relatives - and your cohabiting partner won’t be legally entitled to receive anything.

Putting your life insurance in trust could be a sensible option if the purpose of your policy is to financially protect your partner (and other dependents) if you were no longer around.

In 2021, there were around 3.6 million cohabiting couples in the UK (a 144% rise since 1996)[5] which has resulted in an increasing number of people taking legal action to claim their inheritance[6].

Life insurance in trust pros and cons

To help you easily weigh up the pros and cons of writing your life insurance policy in trust, we have compiled these in the table below:

It’s free to set upNot all policies can be written in trust
Avoid or minimise inheritance tax & maximise pay outIt can be difficult to amend the policy or take it out of trust once the trust is set up
Avoid probate & speed up pay outYou lose some control of your policy while you’re still alive (any changes must be signed off by the trustee)
Greater control over who gets the pay out and whenWith some types of trusts, the trustees can add or remove beneficiaries at their discretion
Flexibility with some trusts to add or remove beneficiaries or trusteesWill cost money if you choose to hire a legal professional to act as a trustee
With some types of trusts, you can nominate yourself as a trustee (allowing you to make changes to the policy if you need to)

How to put life insurance in trust

If you decide that writing your life insurance in trust is the right option for you, then our team at Reassured are on hand to help you with this.

We have a team of experts who can provide a free trust writing service, once you have chosen the policy that suits your needs.

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

Writing your life insurance in trust doesn’t have to be a time-consuming or complex process.

We can provide a simple, non-advisory run-through of the trust application form (for flexible or discretionary trusts), without any industry jargon.

Our dedicated customer service team can be reached between 09:00 - 17:30 on 0808 168 2025, or email

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

Life insurance in trust FAQs

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’ll have peace of mind that the money will go directly to your beneficiaries and not to your estate in the event of your death.

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 for their loved ones.

Writing your policy in trust will transfer ownership of the policy to your trustees, so it’s no longer considered part of your estate.

This will ensure that your loved ones will 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 and you’d like to place it in trust, then you’d need to get in touch with your insurer to find out if this is an option.

Provided the answer is yes (which is highly likely), you can contact our customer services team on: 0808 168 20 25 and arrange for our digital trust form to be emailed out to you. This removes the need for printing, posting and can be completed online in minutes.

If you’re aware of the trust options but you’re not ready to set one up with your new policy, you can choose to do this at a later date.

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

Can you cancel a life insurance policy in trust?

If you need to cancel your life insurance policy, this will also void the trust you’ve set up.

You’ll sometimes need permission from the trustees before you can cancel your life insurance in trust.

If you cancel within the 30 days cooling off period after taking out the policy, you’ll receive a full refund of any premiums paid.

If you cancel after 30 days, your premiums won’t be refundable.

Life insurance in trust forms

Reassured now has a universal, digital trust form allowing you to complete this important task online in minutes.

If the universal trust form is available on your policy, it will be sent to you within 48 hours of your policy starting.

If you have any queries about Trust Forms, please contact us on: 0808 168 2025 between 09:00 - 17:00, Monday to Friday.

At Reassured, we can’t provide any advice on whether putting your life insurance in trust is the right option for you, but our experts can help you fill in the form.

If you require advice or any further help with deciding whether to put your policy into trust, you may wish to speak to a legal and/or financial advisor.







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