Without writing the policy in trust, it means the money you leave behind might not go straight to the people you want to receive it, receive it!

Advantages of using a Trust for life insurance:

- The nominated beneficiaries can receive the proceeds of your policy in the event of death without having to wait for probate to be granted. Probate can take months or in some cases, take years to be granted.

- The proceeds of the trust may normally have the advantage of avoiding inheritance tax (IHT) on your estate, which after the nil rate band would be 40% taxable.

- You are able to nominate who will receive the benefit and to what percentage in the event of your death. Policies not written into trust would pass into your estate and so be taxable.

Types of trusts most commonly used in protection.

- Flexible trust

- Discretionary trust

- Absolute trust

Flexible Trust: A flexible trust is a legal method of holding a life assurance plan for the benefit of the person or persons ("Beneficiaries") you wish to benefit under the plan. The reason why it is called a “flexible trust” is that you retain flexibility over the final distribution of the benefits to your chosen beneficiaries.

Discretionary Trust:

Discretionary trusts are one of the most potentially useful trust arrangements. Their attractiveness lies in their flexibility; the settler has significant freedom in setting the terms of the trust.
The unusual aspect of discretionary trusts is the amount of freedom given to the trustees. The assets placed in trust become the property, in title at least, of the trust itself, and the trustees assume responsibility for the management of these assets. In other trust types the ways in which these trustees can act with regard to the assets is very strictly defined; in many cases the trustees are obliged to follow the trust instrument (that is, the document used to establish the trust) to the letter.

In the case of a discretionary trust, however, the trustees must use their discretion to decide which (if any) of the intended beneficiaries should receive income or capital from the trust. They also have the power to decide how much the beneficiaries will receive, and when.

Absolute: An absolute trust designed for use with life plans including investment bonds. The trust is only suitable for those wanting to make outright, absolute gifts as the beneficiaries can never be changed. The settler (the person) creating the trust cannot benefit from the trust. If greater control and flexibility is required, a more flexible type of trust should be considered instead.