According to Stonebridge, more advisers are helping policyholders avoid life policy payouts becoming stuck in probate with the rest of the policyholder’s estate, rather than going to beneficiaries.
Advisers are reframing conversations to support clients and prevent this, enabling clients to immediately access funds and avoid hardship or financial difficulty.
Stonebridge said it had been educating its members on the value of using trusts and, over time, has seen the number of life policies written in trust rise from 5.3% to 14.3% across five years. Further, the rate of adoption has continued to increase, up from 13.1% a year ago.
Currently, Stonebridge’s advisers place around a quarter of policies in trust on average.
Last week, the Financial Conduct Authority (FCA) published its final report on its Pure Protection Market Study, saying it wanted to see more use of preparatory tools such as trusts and nominated beneficiaries, to allow claims to be paid out quicker.
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It pointed to friction along the claims process, where funds were not getting to recipients quickly and effectively.
John Scrivens, sales director at Stonebridge, said: “When people choose policies, they are often solely focused on the amount of cover, but their loved ones need the money in their pocket in order to benefit from it. Time can be a real factor.
“Using trusts protects beneficiaries from the nightmare of vital funds being locked up in probate, which makes them a crucial pillar of the advice brokers should be giving consumers.”
He added: “All too often, funds are withheld from the bereaved in their time of need because a trust wasn’t considered when the policy was taken out. Fortunately, times have changed and advisers are increasingly conscious of the circumstances in which trusts are most appropriate and their benefits.
“We’ve been banging this drum for a long time, and it has rightly been identified by the FCA as an important focus area. The industry will be better for it, and consumers won’t be left needlessly vulnerable. Policies shouldn’t be placed in trust automatically, but we’re pleased that our network members are identifying increasing numbers of cases where trusts should be used.”
