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Lowering your inheritance tax bill – Usually when you die, the money included in your life insurance policy is taken into account when the tax office calculates the value of your estate. This sum of money might then be taxed by 40% if it goes over the allowance (currently £325,000). But by putting life insurance in trust, this could help to sidestep inheritance tax. The money is paid directly to your beneficiaries and not counted as part of your estate.

Payment could be quicker because you don’t need to wait for probate – Life insurance money that is held within a trust does not need to go through probate. This means the time it takes to make payments to your beneficiaries should be quicker than if you don’t have a policy in trust. Probate is a legal process and it confirms an executor’s authority to deal with your assets and possessions. Probate needs to be granted before any money is paid out and this is sometimes a lengthy process, especially if there’s no will in place.

More control over your beneficiaries – By setting up a trust, you specify exactly where you want your money to go and when. For example, you could appoint a trustee to look after money if a child is under the age of 18. You can also name the people you want to get the money, which is important if you’re not married or in a civil partnership.