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

Q: Who’s involved in a trust?

Settlor : The person (policyholder) who sets up the trust and decides how the policy is managed. They will also continue to pay the monthly premium. Trustees : The person or people who legally own the trust and distribute the pay out according to the settlor’s wishes. They can be a legal professional, family member or friend. The settlor can also automatically a trustee. Beneficiaries : The person or people who benefit from the trust. They can be family members, friends, or a charity. A beneficiary can also be a trustee, as long as they are over the age of 18.

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 does writing life insurance in trust mean?
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 UK [key highlights]

Life insurance can be placed in trust to help avoid or minimise inheritance tax on the pay out
A trust gives you more control over who receives the pay out (your beneficiaries) and when they should receive it (for example, when a child turns 18)
You can set up a trust any time after taking out your policy and it doesn’t cost anything through Reassured
It takes just 5 minutes to complete our online trust form (if taking out an eligible policy)
We’ve helped over 30,000 people write their life insurance in trust
While there are various benefits to this option, a trust cannot be reversed. It may also require additional steps to cancel a policy once it’s set up in trust. You may wish to seek advice from a legal professional before making a decision

What does writing life insurance in trust mean?

Writing life insurance in trust is a process that transfers ownership of your policy to trustees (such as family members, friends or a solicitor) so that it’s not considered part of your estate when you pass away.

It’s one way to legally avoid or minimise inheritance tax on the pay out, so that your loved ones receive a larger sum.

Plus, as the policy is kept separate from your estate, the pay out would go directly to your beneficiaries instead of being delayed by probate.

Writing life insurance in trust is a free option that may be offered to you when taking out your policy.

Unfortunately, this process is often overlooked as many people are unaware of its benefits.

Continue reading as we explain the pros and cons of putting life insurance in trust and answer key questions…

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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.

For example, using a trust may be a good choice if:

You’re a homeowner

Your home is likely to be your largest asset which could affect your inheritance tax liability when you pass away.

You have children or grandchildren

You may wish to leave funds to your dependents as a cash gift. Having a trust is ideal if you want to ensure that they each receive their share at a specified date (for example, their 18^th birthday which is when they can legally accept the inheritance).

You’re concerned about inheritance tax

You want to help cover a tax bill on your estate as well as avoid/minimise inheritance tax on the pay out.

You’re in an unmarried couple

You want to financially protect your partner and have peace of mind that they’ll be legally entitled to any pay out.

Who’s involved in a trust?

Settlor: The person (policyholder) who sets up the trust and decides how the policy is managed. They will also continue to pay the monthly premium.
Trustees: The person or people who legally own the trust and distribute the pay out according to the settlor’s wishes. They can be a legal professional, family member or friend. The settlor can also automatically a trustee.
Beneficiaries: The person or people who benefit from the trust. They can be family members, friends, or a charity. A beneficiary can also be a trustee, as long as they are over the age of 18.

How does writing life insurance in trust work?

Putting your life insurance in trust is a quick and simple process.

Here’s how it works step by step:

Buy an eligible life insurance policy

You take out a suitable policy that meets your needs and budget. Most types of cover can be placed in trust, including whole of life insurance, term life insurance and term life insurance with critical illness cover. A trust can be set up as soon as the policy has started or at a later date.

2. Complete trust form

After taking out a policy, you complete a legal document (called a ‘trust deed’) which includes the details of your chosen trustees and beneficiaries. If setting up a trust through Reassured, we can provide you with a guide on how to complete this.

3. Complete ‘expression of wishes’

In addition to the trust form, you can also submit an ‘expression of wishes’ or ‘letter of wishes’. This is not a legal document but it allows you to give more guidance to the trustees on how you wish the pay out to be distributed following a claim

4. Policy is transferred to trustees

Once the trust form is completed and the insurer sets up the trust, your policy remains in the hands of the trust until it pays out or expires at the end of the term. The trustees legally own the policy once it’s in trust, so you need to get their authorisation if you want to make changes to the terms of your cover

5. Continue paying premiums

You must look after the trust deed, communicate with your trustees about the trust arrangement, and continue paying your monthly life insurance premiums. If you pass away during the policy term, your trustees are responsible for making a claim. They need to complete the insurer’s claim form and provide a death certificate.

As setting up a trust is a legal arrangement, you may wish to seek advice from a legal or financial advisor before making any decision.

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Life insurance in trust pros and cons

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

PROs	CONs
Avoid or minimise inheritance tax (IHT) on the pay out	You can’t take a policy out of trust - it would require cancelling the policy and arranging a new one with a new monthly premium
Faster pay out for your loved ones (avoid probate process)	You lose some control over the policy as you share ownership with the trustees
Better control over who receives the pay out and when it’s distributed	Inheritance tax may not be totally avoided

We explain the pros and cons in more detail below…

PROs of writing life insurance in trust

Avoid or minimise inheritance tax (IHT)

When life insurance is in trust, the pay out is normally kept separate from your taxable estate (an estate is any property, possessions, and money you have at the time you pass away). This avoids or minimises any potential inheritance tax on the pay out and ensures your beneficiaries receive more of the money you intended for them.

Many people take out life insurance to help pay an inheritance tax bill. In this case, it’s important to write the policy in trust so that the pay out isn’t added to your taxable estate (potentially increasing your inheritance tax liability).

The current tax-free threshold is £325,000 (or £600,000 for couples) and the rate is currently 40% on any part of an estate over the threshold^[1].

The government website offers guidance on trusts and inheritance tax (GOV.UK) if you’d like to learn more.

Faster pay out for your loved ones

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].

As life insurance in trust is usually not considered part of your estate, any pay out goes directly to your trustees who can use the money straight away, for example to help cover legal fees or funeral costs or distribute to the beneficiaries.

Without a trust, your trustees would need to wait for probate to be completed before receiving any funds.

Have better control over who receives the pay out and when

As well as ensuring that the pay out goes to your chosen beneficiaries, a trust allows you to specify how and when you’d like the money to be distributed. For example, you could divide up the pay out between beneficiaries and if you’re looking to leave an inheritance for children or grandchildren, a trust can hold their share of until a certain date, such as their 18^th birthday.

Without a trust, the pay out would be added to your estate when you pass away and could be used for other purposes, like paying off outstanding debts in your name.

CONs of writing life insurance in trust

Can be difficult to cancel

As setting up a trust is a legal arrangement, it can’t simply 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 in 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 all named trustees. Any changes made will often be notified to each trustee via letter or email.

Inheritance tax may not be totally avoided

While in some cases it’s possible to avoid inheritance tax, in other cases, tax may still be due. For example, if you change or add a beneficiary within seven years of passing away there could be tax implications.

What's the best life insurance policy to put in a trust?

The best life insurance policy to put in a trust will depend on your specific needs.

You can place most types of life insurance in trust, including:

Whole of life insurance

Provides lifelong cover and pays out a lump sum when you pass away. Often taken out to help cover inheritance tax.

Single or joint term life insurance

Provides cover for just you or you and your partner for a set period (for example 30 years) and pays out if you pass away during the term.

Term life insurance with critical illness cover

Provides cover for just you or you and your partner for a set period (for example 30 years) and pays out if you’re diagnosed with a specific serious illness or pass away during the term.

Why put life insurance in trust through Reassured?

Free life insurance quote comparison. Quotes from just 20p-a-day^†
Free and simple online trust writing service (available with most policies). It takes just 5 minutes to complete our digital form
Top UK insurers. We work with some of the UK’s best life insurance providers
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 100,000 Trustpilot reviews
FCA-regulated broker. Our award-winning service is regulated by the Financial Conduct Authority (FCA).

Types of trusts

There are different types of trusts available to suit different needs. Some are more flexible than others.

With eligible joint and single life insurance policies arranged through Reassured, we offer a ‘flexible’ trust.

Flexible trusts key points

You have the option to name default beneficiaries and how much they should each receive in the event of a life insurance claim, or you can leave this section blank for the trustees to decide
Your chosen trustees can then distribute to any named default beneficiaries, as well as any potential beneficiaries they believe you would have wished to include but hadn’t named at time of completing trust. Trustees can also adjust how the pay out is split
An ‘expression of wishes’ or ‘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 more information about the trust to help you decide if it’s the right option for you.

Other types of trust (not available through Reassured) include:

Discretionary trust: No beneficiaries are named and allows for trustee to distribute the funds at their discretion

Absolute trust: Beneficiaries can’t be changed.

If you need further information on the different trust options before making a decision, 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^†.

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How much life insurance in trust do you need? Use our handy calculator for a quick estimate .

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How to choose beneficiaries

You do not need to name anyone when placing your policy in trust, however our process has space for four beneficiaries.

If you wish to name more than four, this can be done by completing a ‘Letter of Wishes’.

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 children, grandchildren or any unborn children, then the funds would need to be held in the trust until after they turn 18 (the age when they can legally benefit). This can be detailed on a ‘Letter of Wishes’.

How to choose trustees

A life insurance trust requires at least two trustees over the age of 18 and they must have a UK bank account.

It’s important to choose people you can rely on to do the right thing when you’re no longer around.

Trustees need to understand the terms of the trust and be aware of their legal responsibilities.

Trustees 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.

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^[3] – contributing to the increasing number of people who take legal action to claim their inheritance^[4].

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.

If the trust option is available with your policy, we’ll automatically email you our digital trust form within 72 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.

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Writing life insurance in trust common questions

Is life insurance part of an estate?

Yes, 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.