A fifth of advisers unaware of benefits of writing life insurance policies into trust

Michael Lloyd

January 10, 2018

A fifth (20%) of advisers are unaware of the benefits of writing their clients’ life insurance policies into trust, potentially jeopardising pay-outs to the beneficiaries of customers who don’t have a will, research from FTSE 100 insurer Legal & General suggests.

A trust is a legal arrangement allowing the customer to gift their life insurance policy to someone when they die. This is because the money paid out would not be part of the estate of the person covered so that the policy holder’s beneficiaries won’t face inheritance tax on it.

Craig Brown, director of 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.”

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.

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 are not 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, almost a quarter (24%) of advisers thought that over 90% of their clients should have their policies written into trust.

In 2015 Legal & General launched an online Trust Hub, which helps advisers explain the main benefits of putting a policy in trust and is designed for face to face use with clients.

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