Why protection distributors should encourage trusts

What a trust does

When a life insurance policy is written in trust, the payout goes to trustees, who pass it to the beneficiaries named in the trust, rather than into the policyholder's estate. That usually means the money can be paid without waiting for probate, which can take many months. It also gives the policyholder more control over who receives the money, and can mean the payout is not counted as part of the estate for inheritance tax purposes, depending on the type of trust and the policyholder's circumstances.

For families dealing with a bereavement, the difference between a payout in weeks and one in months can be very significant.

Why completion is often low

Most insurers provide trust forms free of charge, and many advisers recommend them. Yet a large share of policies are still not written in trust. The reasons are familiar: the forms arrive after the sale, they ask for decisions about trustees and beneficiaries the customer has not thought about, they may need signatures from several people, and nobody follows up. The customer means to do it, but never quite gets round to it.

The outcome case

Under the Consumer Duty, firms should help customers pursue their financial objectives and avoid foreseeable harm. A family left waiting for probate when a trust would have allowed a quicker payout is an outcome that could have been avoided. Encouraging and supporting trust completion is a practical way to improve outcomes at the moment they matter most.

The commercial case

Customers who have taken the time to put their policy in trust have invested in it. They have thought about who it protects and made decisions with family members. That engagement tends to make the policy more valued and less likely to be cancelled. In Adviser.ai's work re-engineering a digital trusts journey for Reassured, the redesigned journey achieved around three times the completion of the previous approach, and placing policies in trust has been associated with substantially lower clawback.

Making completion easier

The biggest gains come from reducing effort. Explain clearly, in plain language, what a trust does and why it might matter to this customer. Break the process into short steps. Help the customer think through trustees and beneficiaries with simple guidance and examples. Pre-fill what the firm already knows. Allow other parties to sign digitally where the insurer accepts it. And follow up with customers who started but did not finish.

Timing

The best moment to raise a trust is during the advice conversation, when the customer is thinking about who the cover protects. The best moment to complete it is soon after the policy starts, while that thinking is fresh. A digital trust journey sent shortly after the policy goes on risk, with reminders, catches customers while the decision still feels relevant.

Advice boundaries

Trusts have legal and tax implications, and the right type of trust depends on the customer's circumstances. Firms should be clear about what guidance they provide and when the customer should take specialist advice, for example on complex family situations or larger estates. A well-designed journey can explain the options and route customers with complex needs to an adviser.

Measuring progress

Track the share of eligible policies where a trust was recommended, the share where it was started and the share where it was completed, by product and adviser. Look at how long completion takes and where customers drop out. Compare cancellation rates for policies in trust with those not in trust. These figures show both the outcome improvement and the commercial value of the effort.

A simple starting point

Identify recent policies that would benefit from a trust but do not have one. Invite those customers to complete a short digital trust journey, with clear explanations and support. Measure completion. Then build the same journey into the standard post-sale process for every new eligible customer.

Common customer questions

Customers often ask who should be a trustee, whether they can change beneficiaries later, whether a trust affects their control over the policy and what happens on a joint policy. Clear, plain-language answers to these questions within the journey, with a route to an adviser for anything more complex, remove much of the hesitation that stops people finishing.