Writing your life insurance in trust is a simple step that could help your loved ones receive a payout more quickly after you die and, in some cases, help them pay an inheritance tax bill.
But recent figures from life insurance broker LifeSearch suggest many people aren’t taking this step. Around one in four customers completed a trust alongside their life insurance policy in 2025, based on around 7,000 trusts set up from 30,000 referrals using trust provider Genie.
Here, Which? explains what it means to write life insurance in trust, why it matters, and what to check if you already have a policy.
What is a life insurance trust?
Life insurance is designed to pay a lump sum to the people you want to protect if you die while the policy is in place.
A trust is essentially a legal arrangement whereby the trust takes ownership of certain assets, including any outstanding debts. You appoint a trustee or trustees to oversee the trust. These could be family members, friends or perhaps a solicitor.
The main benefit is that the payout can usually be released more quickly because it doesn’t normally need to wait for probate. This can make a real difference if your family relies on the money to cover mortgage repayments, household bills or other essential expenses after you die.
If the policy is written in trust, the payout will also usually sit outside your estate for inheritance tax purposes.
- Find out more: best life insurance.
What happens if the policy is not written in trust?
If your life insurance isn’t written in trust, the payout will usually be treated as part of your estate when you die.
This means your loved ones may have to wait until probate has been completed before receiving the money, which can take weeks or months.
It could also increase the value of your estate for inheritance tax purposes if your estate exceeds the available tax-free thresholds.
Without a trust, there can also be greater uncertainty about who ultimately receives the payout, particularly if your circumstances are complicated or your will is out of date. This can be especially important for unmarried couples, who don’t currently have the same legal rights as married couples or civil partners.
Writing your policy in trust can help avoid these issues by keeping the payout separate from your estate and making it clear who should receive the money.
- Find out more: inheritance tax: thresholds, rates and who pays.
How to write life insurance into a trust?
You can write a life insurance policy in trust when you first buy it. Most insurers offer this during the application, and there is normally no extra charge.
You’ll need to choose trustees; they will be responsible for making sure the payout goes to the right people. These could be family members, friends or a solicitor. You’ll also name the beneficiaries, such as your partner, children or other loved ones.
You can put an existing policy in trust later, but it may involve extra paperwork. If you need help from a financial adviser or solicitor, there could be a cost.
Think carefully before doing this. Once you put a policy in trust, you generally can’t simply change your mind. Depending on the type of trust, it may be difficult to change the beneficiaries or take the policy out of the trust later.
- Find out more: how to write life insurance in trust.
Do you still need a will?
Yes. Writing life insurance in trust can help make sure the policy payout goes to the right people, but it does not deal with everything else you leave behind.
A will sets out what should happen to your money, property and possessions after you die. It also lets you name the person you want to manage your estate and, if you have children under 18, who you would want to look after them.
So even if your life insurance is written in trust, your family may still need a will to deal with your home, savings, personal belongings and any other assets.
The two documents do different jobs. A trust can help with the life insurance payout, while a will helps make your wider wishes clear.
Find out more and get advice on life insurance using the service provided by LifeSearch. Discover more.
4 things to check with your policy
Whether you’ve recently taken out life insurance or have had a policy for years, it’s worth reviewing it from time to time to make sure it still reflects your circumstances.
- Is your policy written in trust? If you’re unsure, check your paperwork or ask your insurer.
- Are your trustees and beneficiaries up to date? Review who manages the trust and who will receive the payout, particularly if you’ve married, entered a civil partnership, divorced, separated or had children since taking out the policy.
- Do you still have the right level of cover? Your needs may have changed if you’ve taken on a bigger mortgage, welcomed children, paid off debts or built up savings. Make sure the payout would still provide the financial support you intended.
- Is the rest of your estate planning up to date? A trust only covers your life insurance payout. Make sure you also have an up-to-date will covering your property, savings and other assets.
Find out more: how to make a will.
