UK consumers at risk of losing nearly £100bn every year, research reveals
6 Feb 2018
New research from Legal & General has revealed that UK consumers risk losing £99.98bn* because their life insurance policies aren’t written into trust*.
- Two – fifths (40%) have never heard of writing a life insurance policy into trust, a legal arrangement that allows a person to gift their policy to beneficiaries when they die
- More than eight in 10 (82%) have assets they want to leave to their loved ones, and worryingly 43% do not have a will
For many, making sure loved ones are provided for should they die unexpectedly is considered an important responsibility. However, whilst Legal & General’s research showed that 82% of consumers have assets they wish to pass on to loved ones in the event of a claim, two-fifths (40%) have never heard of placing their life insurance policy under trust. Worryingly, more than four in ten (43%) consumers questioned said they didn’t have a will in place.
A trust is a simple legal arrangement that allows an individual to place their policy in trust, the policyholder can indicate who they want the proceeds to be paid to and controls when the money from the life policy will be paid out. This can ensure that children or any other chosen beneficiary receive financial support from the money, but will not have full access to the lump sum. It also should help to ensure that any money paid out from the life policy will not be part of the estate of the person covered, helping to minimise Inheritance Tax. For example this means that their spouse, co-habiting partner or family members will be protected from the heavy financial burden of inheritance tax. It will help to ensure that the money paid from the life policy can be paid to the right people quickly, without the need for lengthy legal processes.
Those who do not place their single life policies in trust risk leaving their spouse, co-habiting partner or close family members in a vulnerable situation. If a single life insurance policy is not placed in trust, the proceeds may not go to the chosen beneficiaries as planned. For example, if the policy holder is not married and has not made a will, there is a risk that their co-habiting partner will not be legally entitled to any of the lump sum which could possibly leave them in financial difficulty.
Craig Brown, Director, Legal & General Intermediary said: “It’s certainly tempting to avoid thinking about the future, but it’s essential to remember our responsibility to our loved ones. As this research shows, there is a genuine risk of leaving them exposed and vulnerable to financial difficulty unless people get their affairs in order beforehand.
By speaking with an adviser and putting a life insurance policy into a trust or making a will, policy holders will have much greater security. Knowing that their family will be covered in the case of unforeseen circumstances will not only give policy holders greater peace of mind, but will also ensure that their loved ones gain the maximum benefit from their insurance policy.”
NOTES TO EDITORS
The information contained in this press release is intended solely for journalists and should not be relied upon by private investors or any other persons to make financial decisions.
Legal & General conducted research with analysts Censuswide. The data draws on a survey of 100 financial advisers who sell life insurance and 1006 consumers with life insurance. Research was carried out between 17th – 23rd November 2017.
Average life insurance pay out: £39,000 (Legal & General)
Number of policies in the UK: 6 million (Source: ABI https://www.abi.org.uk/globalassets/sitecore/files/documents/publications/public/2016/keyfacts/keyfacts2016.pdf )
Population at Risk: 42.35% of consumers. They do not have, or do not know if, their life insurance written into trust AND do not have a will (Source: Censuswide)
42.35% of 6m (number of life insurance policies in the UK) is 2.538m
2.538m * £39,000 (Average life insurance pay out from Legal & General) = £98,982,000,000 at risk of being lost.
For further information you may wish to visit our Legal & General Trust Hub at:
About Legal & General
The Legal & General Group, established in 1836, is one of the UK’s leading financial services companies. As at 30 June 2017, the total value of assets across the group was £951.1 billion, including derivative assets. We also had over 9.5 million customers in the UK for our life assurance, pensions, investments and general insurance plans.