23 Mar Is your life insurance set up correctly?

In our experience we find that most people who have existing life insurance, whether this be for repayment of a mortgage or another reason such as inheritance tax planning, haven’t been advised properly by their previous adviser. That is to say their adviser didn’t go the full hog and make sure the cover is written into Trust.

Why should a life policy be written into trust?

In nearly all circumstances a life insurance policy should be written in trust. This is generally for two primary reasons: –

• To make sure the benefit of the plan (the sum assured – likely tens, if not hundreds of thousands of pounds) goes to the intended beneficiaries – spouse, children etc.
• To make sure the benefit of the plan doesn’t form part of the deceased’s estate.

A lot of people in this situation we find have set up their life insurance as part of mortgage or second mortgages they have taken out via their bank and the bank have arranged life insurance to go with it. However, when we check the details of the policies it becomes evident that the benefit will be paid to the deceased’s estate because it hasn’t been written into trust.

One client we recently reviewed their cover for had 6 policies which totalled over £600,000 worth of life insurance that would have paid out in the event of their death. None of this cover had been written into trust and therefore will just form part of their estate on death.

Why is this a problem?

Well… If the client’s estate is already worth a significant amount, this additional £600,000 falling into the mix could likely create an inheritance tax bill for their beneficiaries, causing them to need to find £100,000 plus to pay the tax man before the estate can be released to them.

 What’s the solution?

As you can appreciate everyone has different circumstances so a thorough review should be done on your own personal needs and circumstances.

We can review your existing cover for you and investigate whether your cover is –

a) appropriate for your needs and

b) in trust relevant

Upon completion of this investigation we will recommend appropriate action – whether this be to help you place the cover into trust, reorganise your cover so it reflects your current needs or just simply advise that your current protection is suitable.

Take Action Now

Contact us today to arrange free initial health check on your existing life insurance on 01270 250800 or email: planningteam@alextragroup.co.uk