"Other trust and beneficiary nomination developments are high on our agenda for digital enablement going forward for new and existing customers."
- Jennifer Gilchrist, Royal London protection specialist
Advisers will now be able to place a plan in trust as part of the online application journey making the process easier and more efficient. This means that selecting the right trust for clients can be completed online for Business, Relevant Life Plans and Personal Menu Plans, dispensing with the need for an electronic or wet signature from clients or nominated trustees.
Royal London has highlighted several benefits of writing protection policies in trust, including a quick paid out to the right people since trustees make sure the proceeds are paid to the named beneficiaries. Royal London believes this is particularly relevant given the recent increase in co-habitees who could be left exposed without the right planning in place.
Earlier this year, research conducted by Scottish Widows found that 52% of unmarried adults who are in relationships know whether their partner has a life insurance policy, and that only 27% of those who do know, are unaware of the policy’s value. Furthermore, 34% of couples admit they rarely discuss long-term financial planning because they see it as unnecessary, awkward, or simply too difficult.
These concerns were also shared in Swiss Re's Life Cover Payouts - under the microscope report, written by Ron Wheatcroft and Ruth Gilbert. This report highlighted that approximately one million new policyholders a year could see pay-outs not being paid to the intended person due to a lack of direction of benefit. Cohabitees were considered high-risk since policies are often sold without ensuring the partner can make a claim. In 2021, 27.6% of all couples living together under the age of 65 were cohabitees, showing a 5% increase in the last 10 years.
Royal London also noted that placing a plan in trust would save loved ones’ unnecessary taxes expenses, considering that placing a protection plan in trust means the proceeds don’t form part of the estate and aren’t subject to IHT. Equally, this means the beneficiaries don’t have to wait until probate is granted before they can access the proceeds.
Commenting on these improvements, Jennifer Gilchrist, Royal London protection specialist, has said:
“Improving digital services is a key focus for Royal London to help advisers streamline processes for their clients. Making it easier for advisers to explore the option of a trust with clients and put it into action straight away is hugely beneficial and demonstrates that higher standards of care have been delivered.
“Other trust and beneficiary nomination developments are high on our agenda for digital enablement going forward for new and existing customers. Having both solutions will help deliver the best outcomes for clients and hopefully raise the popularity of trusts, which has been historically fairly low, with only around one in ten policies written in trust.”