Frequently Asked Questions for Life Insurance and Life and Critical Illness Trusts

What is a Trust?

A Trust lets you decide where your money will go in the event of your death, i.e. who will benefit from the money and how much they will get. For Life Insurance policies this is usually a Flexible Trust and for Life and Critical Illness Insurance Policies it is usually a Split Trust.

What are the Benefits of Placing my Life Insurance Policy in Trust?

Setting up a trust ensures that money is passed directly to your beneficiaries, keeping it outside of your estate and without reference to your will or the taxman. There will be no need to apply for probate so the process of getting the money to your beneficiaries will be significantly decreased, by on average about six months. Finally setting up a policy in Trust will ensure that the money is not subject to Inheritance Tax.

What Benefits will Placing my Life and Critical Illness Insurance Policy in Trust Have for me?

There are no benefits to writing a standalone Critical Illness policy in trust as the benefits are payable to yourself; there are however benefits to writing combined Life and Critical Illness policies in trust. The benefits of placing a combined Life and Critical Illness policy in trust are exactly the same as it would be for Life Insurance, however if you needed to claim on the Critical Illness side of the policy, you would receive the benefits instead of your nominated beneficiaries.

How Much will it Cost Me?

Complete your Life Insurance or Life and Critical Illness Insurance application with Top Quote Online and we'll give you the option to write your policy in trust free of charge as well as providing you with the guidance necessary to complete the appropriate forms.

Are there any Disadvantages to Writing my Policy in Trust?


What Happens if want to Change my Beneficiaries?

We understand that everybody's personal circumstances change from time to time. For this reason we only deal with flexible trusts, meaning that you have the ability to change trustees and beneficiaries as you see fit.

What will Happen if I don't Write my Policy in Trust?

The benefit from the Life Insurance will form part of the deceased estate. Upon the event of a claim, the people in need of the money would probably have to apply for probate, which incurs costs of its own and can often take around six months to complete. Then if the total value of the estate is over the inheritance tax barrier (which was 325,000 in 2011/2012) then the amount over the barrier would be taxed at 40% (2011/2012). Please note: Inheritance tax is exempt for husband, wife and civil partners domiciled in the UK.

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.