How to Get the Most from Your Over 50 Life Insurance policy

So, you’ve taken a big leap and secured an over 50 life insurance policy to help protect the ones you love. While this might be a huge relief, you could be left wondering if there’s anything more that you can do? If this is the case, then you could be in luck, there are some steps you could take to get more from your life insurance policy. We’ll explain a little bit about your options as well as providing some practical advice to help make the process easier.

3 ways you could get more from your life insurance policy:

  1. Make a legal Will
  2. Place your policy into a trust
  3. Know how to make a change to your policy if you need to


What is a Will?

If you’re planning to leave something behind for your loved ones whether it’s a life insurance policy or any other assets, making a Will could be a big help. A Will allows you to divide your estate (property, money, possessions and investments) among the people you care about most. Many people assume that their ‘next of kin’ will assume control of their estate when they die but this isn’t always the case unless you have made a Will. That’s why we offer a free Will Kit to all Zestylife customers. Zestylife's Will Kit is a simple Will that does not cover complicated legal matters. If you want more information or have specific needs to discuss, please seek legal advice for guidance.

What happens when you don’t have a Will in place?

Dying without a Will is known as ‘dying intestate’, if this happens, there could be serious repercussions. Your Will will make it clear:

  • Who you would like to leave specific gifts to
  • Who will obtain your property
  • Who will be a beneficiary of the Will
  • Where any leftover money will go after paying for funeral costs after administrative expenses and taxes
  • What you would like to happen in the case that your beneficiaries pass away before you. 

If you do not name specific beneficiaries, the division of your assets could be left up to something called intestacy rules. This is a legal process whereby a specific set of rules are used to determine who has the right to your assets. Unfortunately, when things like this are left up to ‘the law’, certain people who you may believe to be entitled to your estate (unmarried partners sometimes wrongly referred to as common-law' partners, lesbian or gay partners not in a civil partnership, relations by marriage, close friends, carers) may not have the right to claim your inheritance under intestacy rules.

The benefits of using our free Will Kit

You might not think that you need to make a Will, but there can be many benefits to putting one in place. Here are some of the ways in which a Will could make life easier for you and your loved ones:

  • Help to avoid disputes over inheritance by stating who is entitled to what.
  • Help provide a sense of security for your loved ones knowing that they won’t have to worry about figuring out funeral wishes or distributing your estate.
  • Peace of mind for you knowing that you’ve done something to help make your family’s lives easier when the time comes.
  • Make a gift of inheritance or money you plan to leave behind.
  • Help to avoid intestacy rules which can lead to your assets not being distributed as you wish.
  • Specify your funeral wishes so that your loved ones don’t have to guess what you might have wanted.
  • Make arrangements for your pets to make sure they’re in safe hands should something happen to you.
  • Choose someone you trust to execute your Will.

How to make a Will

There is nothing stopping you from making a Will yourself, however, it could be best to get some help. Our Will Kit provides clear, step-by-step instructions. It’s there to help you make your own legal Will from the comfort of your own home. 

While it is not a legal requirement to seek legal advice when writing a Will, it could be worthwhile having a professional take a look at the final document before it has been signed and sealed. If you believe that you need some professional advice, you could hire a solicitor or a Will writing service to help make sure everything is in order. If you would like to read more about Wills, here’s more reliable information on Will writing from Age UK and Gov.uk.

What is a trust?

A Trust is a legal arrangement whereby you give power to a trustee who must ensure that your assets are distributed as you wish. In this case, your life insurance policy payout is considered an asset and it can be placed into a Trust. A trust can manage your assets such as money, investments or property for you, making sure that when you pass away, the right people receive the right money, at the right time. A trust involves the following parties:

The settlor: this is the person who places assets into a trust. You are the settlor in this case and the asset in question is your life insurance policy benefit.

The trustee: this is the person or organisation who manages the trust. You must choose someone to take care of your trust. This individual or organisation will assume responsibility for making sure your life insurance benefit is gifted to your chosen beneficiaries when you pass away.

The beneficiary: this is the person who benefits from the trust. Your chosen beneficiaries are the people or organisations you wish to receive the assets i.e. a spouse, a child or a grandchild.

Before putting your policy into a trust, please speak with a financial advisor or solicitor who can provide you with more information and guidance.

What could placing your policy into a trust do for you?

In some circumstances, there can be benefits to placing your life insurance policy into a trust. Here’s what it could do for you and your loved ones:

  • Make sure that your loved ones receive their inheritance.
  • Help to avoid inheritance tax on the life insurance policy payout.
  • Control and protect your family’s assets.
  • Choose for a Trust to pay out on a specific date i.e. when your grandchild turns 18.
  • There is no wait for probate before the policy can pay out.

Trusts and Inheritance Tax

Using a trust could help your beneficiaries avoid a 40% inheritance tax (IHT). You see, when your total estate is valued at over £325,000, all assets that exceed this threshold will be subject to the 40% IHT. While your life insurance benefit might not exceed this amount, the combined value of your assets i.e. your home or your car could push the value of your estate beyond the threshold leaving your loved ones with a hefty IHT bill. If you have any questions or are unsure about what to do with IHT, the best thing to do is talk with a financial advisor or solicitor. It’s important to remember that the Government may change the tax position with IHT as described.

By writing your policy into a trust, you can help make sure your hard-earned money makes it to your chosen beneficiaries. Similar to writing a Will, it’s important that you seek legal advice and hire a professional if you need assistance with placing your policy into a trust. This can help you to guarantee that everything is as it should be, allowing your loved ones to truly reap the rewards of your life insurance benefit. You can read more about what’s involved in setting up a trust on the Money Advice Service website. 

Making changes to your life insurance policy

As life goes on, circumstances can change. You may find that you could need more or less life insurance cover in the future. It’s important that you review your cover on an annual basis to check that the amount of life insurance you have is suitable for your needs. By doing so, you’re making sure that you have an adequate amount of cover without paying for more than you need.

We understand that the last thing you want to do is get caught up in a complicated process when trying to make a change. That’s why we make it simple. If you would like to apply to make a change to your policy, just pick up the phone and contact us on 0800 152 2191. We aim to provide a hassle-free experience from start to finish and we’re available to chat any time you have a question regarding your policy.

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