January 16, 2018

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This cautionary case study shows what happened when our client’s life insurance policy had not been put in Trust.

What happens if a life policy has not been placed in trust?

We were contacted in February 2017 and informed that Mr D had passed away. We offered to register the claim on his life Insurance policy on his family’s behalf. In this case, the insurer needed some additional information from the GP.  After collecting the relevant information,  the claim was agreed in May 2017 and the money was made available to be paid to his daughters. However, Mr D had not placed his policy under Trust.

When a policy is written into Trust it means three things:

  1. You can name the person who is to receive the money
  2. The money is exempt from Inheritance tax – sitting outside of the person’s estate *
  3. The money avoids probate and there are no delays in the family/beneficiaries receiving the money.**

As Mr D. had not placed his policy in Trust (A  service Future Proof provide to all clients at no additional cost) the money became part of his estate, and the funds could not be released until Probate had been granted.

Applying for a grant of Probate allowed the family the legal right to deal with their late father’s property, money and possessions (the‘estate’). A firm of solicitors was organising this for the family, but of course, they charge for this service and it can take a long time.

At the time of writing, January 2018, 11 months after the claim was made, a Grant of Probate for Mr D’s daughters has still not been granted and hence the claim still not paid. Our dedicated claims team will continue to assist where they can in the claim process and keep in touch with Mr D’s daughters.

We offer a ‘Trustbuilder’ service at no additional cost, where we partially complete trust forms for our clients. All they have to do is get the appropriate people to sign and have their signatures witnessed by an Independent person. It is quick and simple and saves so much time and money for those left behind.

Trusts are not regulated by the Financial Conduct Authority.

* (A person’s estate is comprised of all assets which are held in the deceased’s name alone – which is taxable above a current threshold £325k – 2018). The levels and bases of taxation, and reliefs from taxation, can change at any time. The value of any tax relief depends on individual circumstances.

** (Probate is the legal process for dealing with the estate of someone who has died).

If you are interested in arranging life insurance, income protection insurance or critical illness insurance it really can pay to take expert advice.

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Call our award-winning team on:

0800 644 4468.

Whilst we will make every endeavour to help someone to arrange insurance, there is no guarantee of success.  All applications are subject to underwriting.

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Find out more about Claims paid out by clicking on the links below:

Income Protection Case Study For A Self Employed Claim.

How quickly can claims be paid?

Client ID 84744809