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Brokers ‘lack confidence’ to write life policies in trust

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  • 10/04/2015
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The majority of brokers do not write life policies into trust regularly, according to industry experts, despite 75% of respondents to a Mortgage Solutions poll saying they felt comfortable doing so.

Research carried out by Legal & General in March revealed that less than 10% of its customers were putting life cover policies into trust, meaning that over 90% of life policies could be subject to inheritance tax limits.

The results are in contrast to findings from the most recent Mortgage Solutions poll which showed just a quarter (25%) of respondents were not comfortable writing life policies into trust.

Legal & General recently launched an online trust hub for policy protection holders, aiming to simplify and improve the understanding of setting up a trust.

LV has also taken similar steps setting up a free trustbuilder in 2012 for advisers to help decide when a trust is needed and determine which the most suitable trust is for clients.

Mark Holweger, managing director, intermediated, Legal & General Insurance, said: “I think there is a lack of knowledge of trusts in general and this lack of knowledge leads to avoiding discussion on trusts. Many advisers do not see the benefits of trusts to their customers and regard it as additional work for them to do. Actually it is protecting their customer – and their retention of that customer in the future by offering a full service.”

Head of network at Pink Home Loans Mark Graves added: “Most mortgage brokers still feel uncomfortable about talking to their clients about protection and, because of this, they do not tend to put policies in trust regularly.

“If there was a generic trust form available for advisers to use we would overcome the first objection put forward by advisers. The onus on developing a standardised form has to be with the protection providers. This would help networks to train their brokers in a consistent manner with regards to putting policies in trust which one might hope would significantly increase take up.

“It is interesting that 75% of people who have completed the Mortgage Solutions poll have answered that they understand the importance of writing policies in trust. However, the evidence from the life companies is opposite to this, it leads me to believe that the majority of people participating in the survey are the advisers who already realise how important this issue is.”

SimplyBiz Mortgages chief executive Martin Reynolds said that despite common perceptions surrounding trusts, writing life policies in such a way was no longer a complicated process for the adviser.

“Trusts have always been the big conundrum within the protection market. But providers have been working hard to streamline the process and some now offer on line submission of trust documents,” he said.

“Providers and distributors need to work with the advisers to ensure that they fully understand the benefits of policies in trusts and to help create a process that is easy to explain to the client and also the provides an easy submission process for the adviser.”

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