Trusts hold benefits for life policies

WHEN it comes to taking out life insurance, most policyholders believe they have made provision for their loved ones if anything should happen to them.

While it is true that the beneficiaries of the policy will receive the money, if the policy is not written in trust, it could take significantly longer for the proceeds of the policy to be paid out.

This is something that financial advisers should be aware of but, worryingly, research from Standard Life has revealed that only 10 per cent place "nearly all" their protection business in trust.

And some 60 per cent use trusts for less than half their protection business.

As well as faster pay-outs, the benefits to policyholders of placing protection policies in trust include the ability to split benefits to different beneficiaries from a single policy and the pay-out being free of inheritance tax.

Despite Gordon Brown, the Chancellor, tinkering with trusts in his budget in March, most trusts should still be considered as a viable vehicle for policyholders to transfer funds on death.