A trust is a simple legal arrangement that allows the customer to gift their life insurance policy to someone when they die, and it should help to ensure that the money paid out would not be part of the estate of the person covered. This means that the policy holder’s beneficiaries won't face the burden of inheritance tax on it, or risk the pay-out being delayed.
If a life policy is not placed into trust, the proceeds may not go to the person the customer wishes as the beneficiary, and if the policy holder is not married and has not made a will, their partner may not be legally entitled to the policy proceeds at all.
Despite the importance of writing life insurance policies into trust, Legal & General’s research revealed that less than half (45%) of advisers always discuss these benefits with their clients, with 18% stating that it’s not something that they prioritise talking about.
When asked why these conversations aren’t taking place, 27% of advisers claimed that the policy application process takes so long that they simply ‘run out of time’ to discuss writing the policy into trust.
However, the same study found that almost a quarter (24%) of advisers think that over 90% of their clients should have their policies written into trust.
In 2015 Legal & General launched an online Trust Hub. The tool helps advisers explain the main benefits of putting a policy in trust and is designed for face to face use with clients. The Trust Hub can be accessed here.
Craig Brown, Director, Legal & General Intermediary, said: “More education is clearly needed around the topic of trusts to ensure that clients are offered all relevant options and can make the right decision to best suit their needs. Our 2016 research found that for three-quarters of intermediaries, achieving ‘quality customer outcomes’ is the most important aspect of their day to day role. In order to ensure this is happening, it’s important that advisers themselves are aware of the products and services out there which will really make a difference to their clients.”
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