Jargon Buster - Definition of Trust (Life Insurance)

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Trust (Life Insurance)

is an arrangement which allows designated trustees to administer the payout from a life insurance policy in the event of the death of the life assured. The process of a trust is that in the event of the death of the grantee (policyholder), the life insurance trust is passed to the trustees, the policy then pays out to the trust and then finally the money is distributed accordingly by the trustees.

The three main advantages of writing a life insurance policy in trust are to:

  1. Avoid estate taxes such as inheritance tax.
  2. Nominate multiple beneficiaries.
  3. Avoid time and costs associated with probate.

Probably the most useful reason for writing life insurance into trust is to avoid IHT (Inheritance Tax).

There are different types of trust available that have different uses dependant upon your requirements for example split, flexible, stakeholder and absolute.

The Financial Conduct Authority does not regulate trusts.

The Financial Ombudsman Service is available to sort out individual complaints that clients and financial services businesses aren't able to resolve themselves. To contact the Financial Ombudsman Service please visit www.financial-ombudsman.org.uk.


Please note that all definitions are intended for general guidance only. For official and current definitions you should always double check your policy wording.

The Financial Conduct Authority do not regulate tax and trust planning. Levels and basis of relief are based on individual circumstances and are subject to change.

If you are in doubt of the meaning of any terms, why not email us on info@topquoteuk.com

The Financial Conduct Authority does not regulate trusts.

The Financial Ombudsman Service is available to sort out individual complaints that clients and financial services businesses aren't able to resolve themselves. To contact the Financial Ombudsman Service please visit www.financial-ombudsman.org.uk.