Should you put your life insurance in a trust?
Learn about the pros and cons of putting life insurance in a trust. And what to think about before deciding.
Published: 9 July 2026
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What is a trust?
A trust is a legal arrangement that lets you choose who should receive your assets or money when you are no longer around. You would appoint a trustee to manage the trust, and you name beneficiaries who will receive the payout or benefit from the assets.
Your life insurance policy is considered an asset, which means you can place it in a trust. It would then be handled separately from the rest of your estate.
When you take out Tesco Life Insurance, you can choose to place your policy in a trust. This would allow you more control over who would receive the payout if you were no longer here.
Trust vs no trust. What’s the difference?
|
Feature |
Life insurance in a trust |
Life insurance not in a trust |
|---|---|---|
|
Speed of payout |
Usually faster, as probate (or confirmation in Scotland) is not required for the policy, this is the legal process that deals with administering someone’s estate |
Payout may be delayed until probate (or confirmation in Scotland) is completed, this is the legal process that deals with administering someone’s estate |
|
Inheritance tax treatment |
Generally excluded from the estate |
Usually forms part of the estate and may increase inheritance tax |
|
Who receives the payout |
Decided by the trust instructions |
Decided by the will or intestacy rules (the legal rules that apply when someone doesn’t have a will, which differ across the UK) |
|
Control after death |
Trustees follow your wishes |
Executors manage the estate |
|
Flexibility |
Varies by trust type (flexible or fixed) |
No flexibility after death |
|
Who legally owns the policy |
Trustees |
Policyholder (until death), then estate |
Why put your life insurance in a trust?
There are a number of reasons someone might want to place their life insurance in a trust.
1. More control
A trust lets you specify exactly who should receive the payout and who will manage it for you. This can be beneficial if you have children, dependants, or a blended family.
2. A faster payout
If your life insurance is in a trust it will likely avoid probate (or confirmation in Scotland), meaning trustees can often access the payout sooner. Probate can take months, so this can make a significant difference at a difficult time.
3. Potential inheritance tax benefits
If the payout forms part of your estate, it may contribute towards inheritance tax. A trust keeps the policy separate, and in most cases the payout will not be included in the estate's value.
What are the disadvantages of a trust?
A trust can be helpful, but there are a few things it doesn’t do:
- It doesn’t change your life insurance cover or the terms of your policyIt doesn’t change your life insurance cover or the terms of your policy
- It doesn’t avoid income tax (life insurance payouts are normally free of this anyway)It doesn’t avoid income tax (life insurance payouts are normally free of this anyway)
- It doesn’t give trustees control over any other part of your estateIt doesn’t give trustees control over any other part of your estate
- It doesn’t let you reverse ownership once it’s been set up, you can’t change your mind later because your circumstances changeIt doesn’t let you reverse ownership once it’s been set up, you can’t change your mind later because your circumstances change
- It doesn’t replace the need for a willIt doesn’t replace the need for a will
Before you set up a trust
A trust has legal and practical implications, so it’s important to understand them. Here are some things to think about before setting up a trust.
1. It can’t usually be reversed
Once a trust is created, it’s legally binding. You give up ownership of the policy to your trustees and cannot typically undo the arrangement later.
2. Trustees hold responsibility
Trustees must act according to the terms of the trust. Choose people you trust and make sure they understand the role.
3. Professional advice may help
Trusts can be complex. Independent financial or legal advice can help you decide if it’s the right thing for you to do. You can find regulated advisers at unbiased.co.uk or lawsociety.org.uk.
Types of trusts for life insurance
Flexible (discretionary) trust
Allows multiple potential beneficiaries and gives trustees flexibility to decide who receives money. You may be able to update beneficiaries as circumstances change.
Absolute (bare) trust
A fixed arrangement where you name beneficiaries at the start. They can’t be changed later, even if your situation changes.
Survivor trust
Often used for joint life policies. The payout goes to the surviving partner (as long as they outlive you by a set number of days). This may be useful if you’re not married or in a civil partnership.
Practical guidance: choosing the right trustees
Before you set up a trust, take some time to think about:
- Whether the person is comfortable handling financial mattersWhether the person is comfortable handling financial matters
- Their willingness to take on responsibilityTheir willingness to take on responsibility
- Their capability to execute the wishesTheir capability to execute the wishes
- Whether they are likely to remain in contact with your beneficiariesWhether they are likely to remain in contact with your beneficiaries
- Their relationship with the people you want to benefitTheir relationship with the people you want to benefit
- Whether they are likely to outlive youWhether they are likely to outlive you
- Whether they understand your wishesWhether they understand your wishes
Keeping a trust up to date
Once a trust is set up, it generally can’t be undone, but it still needs regular review. Consider:
- Telling your trustees where documents are storedTelling your trustees where documents are stored
- Checking that trustees’ contact details are up to dateChecking that trustees’ contact details are up to date
- Reviewing the beneficiaries listed (especially in flexible trusts)Reviewing the beneficiaries listed (especially in flexible trusts)
- Notifying your insurer if your personal circumstances changeNotifying your insurer if your personal circumstances change
- Storing trust documents alongside your willStoring trust documents alongside your will
This helps avoid confusion for your family later on.
How to put your life insurance into a trust
- 1. Decide whether a trust may suit you1. Decide whether a trust may suit you
- 2. Choose your trustee or trustees2. Choose your trustee or trustees
- 3. Complete the insurer’s trust form when you take out the policy3. Complete the insurer’s trust form when you take out the policy
- 4. If you’re adding a trust to an existing policy, you may need help from a solicitor or adviser4. If you’re adding a trust to an existing policy, you may need help from a solicitor or adviser
- 5. Store your trust document securely and let your trustees know where it is5. Store your trust document securely and let your trustees know where it is
Can you put a joint life policy in a trust?
Yes - a joint life insurance policy can be placed into trust, which can help make sure the payout goes directly to the beneficiaries rather than forming part of the estate. Writing a policy into trust can speed up payment, provide greater certainty over who receives the money, and may help reduce inheritance tax. However, trust options for joint policies can be more limited than for single life policies, so it’s important to check which trust types your insurer allows.
Why get Tesco Life Insurance?
At Tesco Insurance, we want to help you with the things that matter most. That’s why Tesco Life Insurance comes with a Big Win and lots of Little Helps.
- Clubcard Prices - Save on Tesco Life Insurance with your Clubcard.Clubcard Prices - Save on Tesco Life Insurance with your Clubcard.
- Your Big Win - Get a welcome gift after you've paid 6 months' premiums. Available on policies with a 3‑year minimum term. T&Cs apply.Your Big Win - Get a welcome gift after you've paid 6 months' premiums. Available on policies with a 3‑year minimum term. T&Cs apply.
- Your Little Helps - Get a full year of coupons in your Tesco grocery app to help you shop at Tesco. Available on policies with a 3‑year minimum term, Clubcard app required and must be opted in to Tesco marketing. T&Cs apply.Your Little Helps - Get a full year of coupons in your Tesco grocery app to help you shop at Tesco. Available on policies with a 3‑year minimum term, Clubcard app required and must be opted in to Tesco marketing. T&Cs apply.
As well as your Tesco benefits, you’ll also get Aviva DigiCare+ - a health and wellbeing service from Aviva that includes unlimited Digital GP consultations and the Bupa Anytime HealthLine.
Tesco Life Insurance is provided and administered by Aviva, who have a 5-star Defaqto rating for life insurance and pay out on 98.7% of claims*.
Help for Life Insurance customers
Get help and support online. Or find out how to contact Aviva, our life insurance provider.
Important information
About Tesco Life Insurance
Tesco Life Insurance is arranged, administered and underwritten by Aviva Life & Pensions UK Limited.
Tesco Personal Finance Ltd acts as an introducer to Aviva Life & Pensions UK Limited which is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Member of the Association of British Insurers. Firm Reference Number 185896.
Aviva Life & Pensions UK Limited. Registered in England & Wales No. 3253947. Registered Office: Aviva, Wellington Row, York, YO90 1WR. Tesco Personal Finance Ltd and Aviva Life & Pensions UK Limited. are not part of the same corporate group.
About Tesco Insurance
Tesco Insurance is a trading name of Tesco Personal Finance Ltd, Registered Office: 2 South Gyle Crescent, Edinburgh, EH12 9FQ (registered in Scotland, no SC173199) which is authorised and regulated by the Financial Conduct Authority (register no. 186022).
Aviva DigiCare+ app
With the Aviva DigiCare+ app, you can start using a range of health and wellbeing services when you take out your policy.
Members of your family can use it too, as long as they're eligible.
The Aviva DigiCare+ app is provided by Square Health. The services are provided by Square Health and other selected partners.
You'll find full details about the services in the app, along with the terms and conditions, residency restrictions and privacy policy.
Aviva DigiCare+ is a non-contractual benefit that could be changed or withdrawn by Aviva at any time. So, it won't appear in any contract you've signed, or in any terms and conditions.
Life Insurance policy booklets
Please check the policy documents to make sure the cover you’ve chosen meets your needs.
The policy booklet and product information documents tell you about the benefits, limitations and exclusions that’ll apply to your cover.
Tesco Life Insurance is provided, administered and underwritten by Aviva Life & Pensions UK Limited.
Aviva have a 5-star rating for life insurance from Defaqto. And they pay out on 98.7% of life insurance claims*.
*Aviva UK individual claims report 2026, based on claims paid in 2025.
Learn more about Life Insurance
Find the right cover to give financial support to your family after you’ve gone. Tesco Life Insurance comes with Clubcard Prices, some great Tesco shopping benefits and Aviva DigiCare+.