Life insurance could be a crucial safety net for your clients and their loved ones when they face a loss in the family. If both members of a couple are working and one of them passes away, the surviving individual may find it difficult to manage their expenses or save for the future with a reduced income. The situation could be even more challenging if the sole earner in a household passes away.

Fortunately, a life insurance payout could help your clients or their families clear their mortgage, cover general living costs, and build wealth for the future. As a result, they can remain financially stable after a bereavement.

However, as you might be aware, there has been a significant increase in probate delays in recent years. This could mean that clients must manage without the additional funds from a life insurance payout for many months, if not years, until probate is granted.

Read on to learn why this is and how placing life insurance in a trust could be beneficial for your clients.

The beneficiaries of a life insurance policy may not receive any funds until the probate process is complete

To understand the challenges created by probate delays, it’s important to consider the process through which beneficiaries usually receive a payout from a life insurance policy.

Normally, when a person passes away, their life insurance provider pays the funds to their estate. So, once probate is granted and the executor of the person’s will distributes the estate, the named beneficiaries receive the settlement from the life insurance policy.

If there are delays with the probate process for any reason, this could mean your clients’ families struggle to manage their financial responsibilities until they eventually receive the funds from the life insurance settlement. They could also find it difficult to continue making contributions to their savings for the future.

Depending on how long the delay is, missing out on these payments to their savings and investments could significantly disrupt an individual’s retirement plan.

Unfortunately, this situation could be more likely than ever. Indeed, MoneyAge reports that the number of probate cases taking more than a year to be granted increased by 134% between 2020 and 2023.

Additionally, any outstanding Inheritance Tax (IHT) must be paid before probate is granted. If your client has a sizeable estate, their family may have a large bill to cover. While they may be able to recoup the wealth once they receive a payout from a life insurance policy, they’ll still need to find the funds to pay the bill. This could add more financial pressure to your clients’ families.

Fortunately, trusts might provide a solution to these issues and help clients and their families stay on track with their financial plans, no matter what happens.

Placing a life insurance policy in a trust could help your clients protect their families financially

Trusts can be useful for several aspects of financial planning, such as mitigating IHT and managing complex estate plans. Your clients may also benefit from placing their life insurance policy in a trust.

If the policy is in a trust, the settlement is paid directly to the beneficiaries. There is no need to wait until probate is granted before the beneficiaries can access the funds because they are not part of the estate.

As a result, the client’s family receives the vital financial support they need right away.

What’s more, they could use some or all the funds from the life insurance payout to cover an IHT bill. This could prevent certain delays with the probate process and reduce the financial burden on the family.

Helping your clients place their life insurance policy in a trust could mean that they and their families are better able to manage the financial challenges of bereavement.

Get in touch

If your clients want to ensure that their family is financially secure, we can help.

They can contact us at hello@ardentuk.com or call or WhatsApp us on 01904 655 330. As an award-winning financial advice company with advisers included in the 2025 VouchedFor Top Rated guide, you can be sure that we’re a bona fide company providing excellent advice and high-quality service.

Please note

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

All information is correct at the time of writing and is subject to change in the future.

Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

The Financial Conduct Authority does not regulate estate planning, tax planning or trusts.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

Note that life insurance plans typically have no cash in value at any time and cover will cease at the end of the term. If premiums stop, then cover will lapse.

Cover is subject to terms and conditions and may have exclusions. Definitions of illnesses vary from product provider and will be explained within the policy documentation.