Did you know that only 6% of people put their life insurance in trust? Which means there are a lot of people out there who are missing out on some of the special benefits of trusts for life insurance. For instance, writing a life insurance policy in trust could help you avoid going over the threshold for inheritance tax.
A trust enables you to 'save' or 'set aside' a particular asset in order to benefit a particular or person (who are named as beneficiaries). This asset will be managed by the trustee(s) until the specified time - i.e. when the beneficiaries are intended to 'take their benefit' from the trust. An example of this would be your children going to University, or your significant other maintaining the family home until the children reach adulthood. Life insurance policies can be used as an asset and placed into a trust. A benefit of writing a life insurance in trust is that the payout from the policy can if you choose, be paid directly to your family in the event of your death - rather than makeup part of your legal estate. Therefore the money is not taken into consideration when any inheritance tax contribution is being calculated.
It shouldn't do. Your life insurance provider will provide you with this as an option when you take out your policy. You could also transfer an existing life insurance policy into trust - although we would always recommend you speak to a professional and independent legal/financial advisor before you take out any kind of life insurance policy.
For more information on writing a life insurance policy in trust, read this guide from Bobatoo.co.uk - http://www.bobatoo.co.uk/blog/writing-life-insurance-in-trust/