Life insurance after a death: trust status decides days or months

When someone dies, their life insurance policy – if they had one – can be one of the most important financial assets to locate and claim. The payout can cover funeral costs, an outstanding mortgage, or ongoing household bills during a period when money is often tight and everything feels overwhelming.

This guide explains what happens to life insurance after a death in the UK: whether the payout goes through probate, how the trust status of a policy affects things, who can make a claim, what documents you need, how long it takes, what happens with different policy types, and what to do if you cannot find the policy.

This is one of many guides in the what happens to assets when someone dies section.

The short answer

When someone dies, the life insurance payout goes either to named beneficiaries directly (if the policy was written in trust) or into the estate (if it was not). For most people, the key practical steps are: locate the policy, contact the insurer, provide the death certificate, and complete the insurer’s claim form.

According to the Association of British Insurers, 96.5% of life insurance claims were paid out in 2024 – across 50,499 claims totalling £4.025 billion, an average payout of £79,703. The process is generally straightforward.

Does life insurance go through probate?

Whether or not a life insurance payout goes through probate depends almost entirely on whether the policy was written in trust.

Policies written in trust

When a life insurance policy is written in trust, the policy is legally owned by trustees rather than by the deceased. On death, the trustees pay the money directly to the named beneficiaries – without the payout forming part of the estate and without waiting for probate to be granted.

This matters for two reasons:

1. Speed. Probate can take months – sometimes over a year for complex estates. A trust-held payout can reach beneficiaries within weeks of the death certificate being issued.
2. Inheritance tax. Because the money sits outside the estate, it is not counted when calculating whether inheritance tax is due. This can make a substantial difference: a £300,000 payout added to an estate worth £250,000 would push the total above the £325,000 nil-rate band and trigger a 40% tax charge on the excess – £90,000 of which comes from the payout alone.

Policies not in trust

If the policy was not written in trust, the payout forms part of the deceased’s estate. That means:

• Probate (or letters of administration for intestate estates) is usually required before the insurer will release the funds
• The payout is treated as part of the estate for inheritance tax purposes
• Distribution to beneficiaries follows the will (or intestacy rules if there is no will)

Many older policies – particularly those taken out before trust writing became standard practice – will not be in trust. It is worth checking the policy documents carefully.

How to tell whether a policy is in trust

The policy documents should state whether it is held in trust. There may be a separate trust deed. If you are unsure, contact the insurer directly and ask. The Association of British Insurers also provides guidance on tracing and understanding policies. Source: Association of British Insurers – life insurance claims.

Can a policy be written in trust retrospectively?

Yes – in many cases, an existing policy that is not in trust can be assigned into a trust after it was taken out. This is sometimes called “writing an existing policy in trust” or a “deed of assignment.” Most major insurers offer this at no cost. The policyholder (or, in estate administration, the executor with appropriate authority) would need to complete a trust deed form with the insurer and name trustees and beneficiaries.

The key limitation is timing: if the policyholder has already died, the policy cannot be retrospectively placed in trust – this step must be taken during the policyholder’s lifetime. If you are reviewing someone’s financial affairs after a bereavement and discover an untrusted policy, the payout will go through the estate. However, this information is useful for surviving policyholders who discover their own policy is not in trust.

Life insurance and inheritance tax

Life insurance payouts are not subject to income tax or capital gains tax. The inheritance tax (IHT) question is the one that catches families out.

• Policy in trust: The payout is outside the estate and not counted for IHT purposes.
• Policy not in trust: The payout is added to the estate’s total value. If the combined estate (including the payout) exceeds the nil-rate band, the excess is taxed at 40%.

The standard nil-rate band is £325,000 per person (2025/26 tax year). An additional residence nil-rate band of up to £175,000 may apply if a main home is left to direct descendants. Source: GOV.UK – inheritance tax thresholds and rates, verified June 2026.

This means a £200,000 life insurance payout added to an estate already worth £200,000 would not trigger IHT. But a £300,000 payout added to an estate worth £150,000 would push the total to £450,000 – £125,000 over the threshold – and IHT of £50,000 would be due.

For more detail on how IHT is calculated, see our guide to inheritance tax.

Who can make a life insurance claim?

This depends on the policy setup:

• Trust-held policy: The trustees named in the trust deed make the claim and direct the payout to beneficiaries. If the policyholder wrote the policy in trust and named a spouse or children as beneficiaries, those trustees handle the process.
• Non-trust policy: The executor of the will makes the claim on behalf of the estate. If there is no will, the administrator (appointed via letters of administration from the Probate Registry) is the claimant.
• Named beneficiary (no trust): Some policies name a beneficiary without being formally written in trust. In these cases, the insurer may pay the named person directly, but the position varies – confirm with the insurer.
• Death in service: The employer’s pension or life scheme trustees handle the claim. The employee’s nominated beneficiary receives the funds, guided by the expression-of-wish form.

If you are the next of kin but not a named trustee, executor, or beneficiary, you may still be able to initiate contact with the insurer to locate the policy – but the insurer cannot release funds to you without the relevant authority.

Types of life insurance policy

The basic claims process is the same for all policy types: contact the insurer, provide documents, submit the claim form. There are some practical differences between policy types.

Term life insurance

Term policies cover a fixed period – for example, 25 years to match a mortgage. If the person dies within the term, the insurer pays the agreed sum. If they die after the term has expired, the policy pays nothing (there is no investment element).

Decreasing term policies are a variant commonly used for mortgage protection: the sum insured reduces over time, roughly matching the outstanding mortgage balance. The payout is designed to clear the loan, not leave a surplus. Check whether the policy is level or decreasing before contacting the insurer.

Most term policies written through a mortgage are mortgage protection policies – specifically designed to clear the outstanding loan. The insurer pays the mortgage lender directly, or pays the estate/beneficiary to do so. For more on mortgages after a death, see what happens to a mortgage when someone dies.

Whole-of-life insurance

Whole-of-life policies pay out whenever the policyholder dies – there is no fixed term. They are more expensive than term policies but guarantee a payout. The claims process is the same as for term policies.

Over-50s plans

Over-50s plans are a specific type of guaranteed whole-of-life policy for people aged 50 to 80 (or similar ranges, depending on the provider). Acceptance is guaranteed with no medical questions. The payout is usually smaller – designed to cover funeral costs or leave a modest sum.

One important difference: over-50s plans often have a 12-month waiting period. If the policyholder dies within the first year of the policy (for reasons other than an accident), the payout may be limited to a return of premiums paid rather than the full sum. Check the policy terms carefully. Once past that initial period, the full amount is paid. Source: Legal & General – over-50s life insurance payouts.

Critical illness cover

Critical illness cover is not a life insurance policy. It pays out if the policyholder is diagnosed with one of a defined list of serious conditions – but the policyholder must survive to receive it. On death, a critical illness policy does not pay out unless it also includes life cover as a combined policy. Check whether the policy is a standalone critical illness policy or a combined life and critical illness policy.

Terminal illness benefit

Many life insurance policies include a terminal illness benefit at no extra cost. If the policyholder is diagnosed with a condition and given a life expectancy of 12 months or less, the insurer will pay the life insurance sum early – while the policyholder is still alive. This is sometimes called an “accelerated benefit” or “living benefit.”

If a terminal illness claim has already been paid out before the person died, the life insurance policy is considered settled. There is no further payout on death. Check the policy documents to confirm whether a terminal illness payment was made.

Joint life insurance policies

Joint life policies cover two people – usually a couple. There are two distinct types, and they work very differently.

First-death policies are the most common. They pay out once – on the death of whichever person dies first. On the first death, the insurer pays the agreed sum to the surviving policyholder. The policy then ends. The survivor does not retain cover under the same policy; if they want ongoing cover, they will need to take out a new single-life policy.

For married couples and civil partners, the payout on first death is typically straightforward: the money goes to the surviving spouse directly, without going through the deceased’s estate. This avoids probate on that sum and also falls within the unlimited spouse/civil partner inheritance tax exemption. Source: Legal & General – joint life insurance.

Last-survivor policies (also called “joint life second death” policies) work differently: they pay out only after both policyholders have died. These are less common in pure life insurance but are used in estate planning – often to provide a lump sum to cover inheritance tax when the second spouse dies. On the first death, nothing is paid; the surviving policyholder remains covered. On the second death, the insurer pays out to the named beneficiaries or the estate.

If both policyholders die simultaneously (for example, in an accident), most joint life policies pay out once to the estate of the policyholder who is deemed to have survived the other, however briefly. The specific rules depend on the policy wording. Source: ABI – joint life last survivor glossary.

Employer death-in-service benefit

Death-in-service benefit is a form of group life insurance provided by employers. If an employee dies while working for the company, the employer’s insurer pays a lump sum – typically two to four times the employee’s annual salary – to a nominated beneficiary.

Crucially, the money does not go to the estate and does not usually go through probate. Instead, the employer’s scheme trustees hold the funds and pay them to whoever the employee nominated via an “expression of wish” form. The benefit is paid tax-free. Source: ABI – group life cover.

By law, death-in-service payments must be made within two years of the scheme being notified. If that deadline is missed, a tax charge of up to 45% applies. Notifying the employer promptly is important – do not wait until the estate is otherwise settled.

The death-in-service claim is made through the employer (or their HR department), not the insurer directly. The employer notifies the pension scheme or group life insurer on behalf of the family.

Death-in-service and the expression of wish form. The expression of wish (or “nomination of beneficiary”) form tells trustees who the employee wanted to receive the benefit. Trustees are not legally bound by it – this discretion is deliberate, as it keeps the benefit outside the estate for IHT purposes – but they will almost always follow it. If the employee never completed a nomination form, the trustees will use their discretion, typically paying to the next of kin or estate. If you discover the person had death-in-service cover but left no nomination, contact the employer’s HR department as soon as possible.

Overseas life insurance policies

This situation is more common than people expect – particularly if the deceased moved to the UK from abroad, worked overseas, or took out a policy in another country.

Foreign policies and UK probate. A life insurance policy issued by an overseas insurer is generally not subject to UK regulation and does not automatically fit within the UK probate process. The claim must typically be made directly with the overseas insurer, following the rules of the country where the policy was issued. Documentation requirements vary – some countries require a notarised death certificate or an apostille (a certified stamp that validates UK documents for use abroad).

IHT treatment. Whether a foreign policy is included in a UK estate for inheritance tax purposes depends on the domicile of the deceased and the nature of the asset. HMRC taxes the worldwide estates of UK-domiciled individuals. If the deceased was UK-domiciled, the value of an overseas policy payout that forms part of their estate will be included in the IHT calculation. A policy written in trust overseas may still fall outside the estate, but the trust must be validly constituted under its governing law. Source: GOV.UK – HMRC helpsheet HS321 – gains on foreign life insurance policies.

FSCS protection does not apply. The Financial Services Compensation Scheme only covers policies issued by UK-authorised insurers. An overseas policy issued by a foreign insurer regulated in another jurisdiction is outside FSCS protection. If that insurer fails, there may be no UK compensation route.

Practical steps. If you believe the deceased had a policy with an overseas insurer, start by locating the policy document and identifying the issuing company. The deceased’s financial adviser or solicitor (in the country of issue) is the best starting point for guidance on the local claims process.

What you need to do

If you are dealing with someone’s life insurance after their death, here is what to do.

Step 1: Find the policy

Look through paper files, emails, bank statements (for regular premium payments), and any digital document folders. If you cannot locate a policy but suspect one exists, the Association of British Insurers runs a free policy tracing service at abi.org.uk/data-and-resources/tools-and-resources/tracing-an-insurance-policy/. There is no time limit on making a claim.

Also check:

• The deceased’s solicitor or financial adviser
• Old correspondence from an insurer (including emails)
• Any employer HR records (for death-in-service benefit)

Step 2: Contact the insurer

Call or write to the insurer’s bereavement team. You will need to provide:

• The name of the deceased
• Their policy number (if known)
• The cause of death
• Your relationship to the deceased

Dedicated bereavement contact details for common UK insurers are listed at the bottom of this page.

Step 3: Gather the documents

You will typically need:

For trust-held policies, the process is lighter: usually just the death certificate and policy details. For non-trust policies on larger estates, you may need probate first.

Step 4: Submit the claim

Once the insurer has the completed claim form and documents, they will assess the claim. In straightforward cases, a decision is reached quickly. If the insurer needs to check medical records or investigate the circumstances of death, it may take longer.

Step 5: Receive the payout

The insurer will transfer the sum to the relevant bank account – the beneficiary’s account for trust-held policies, or the estate account for non-trust policies. Confirm payment method and expected timescale when you submit the claim.

How long does a life insurance payout take?

For most straightforward claims, payment arrives within two to four weeks of the insurer receiving all required documents. Some insurers aim to pay as quickly as five working days once a valid claim is approved – Aviva, for example, aims for this on straightforward life claims.

Several factors affect timing:

• Trust status. A trust-held policy can pay out within days of the death certificate being supplied – no probate needed. A non-trust policy on a larger estate may have to wait months for probate before the insurer will release funds.
• Completeness of documents. Missing paperwork is the most common cause of delay. Gathering certified copies of the death certificate upfront, and having the policy number ready, avoids most hold-ups.
• Contestability period. If the policy was taken out within the last two years, the insurer may review the original application more carefully – checking whether all health information was disclosed correctly at the time. This is standard practice, not a sign the claim will be declined, but it can add several weeks.
• Contested claims. If there is any dispute about beneficiaries or the validity of the policy, the insurer will not pay until it is resolved.

Your rights if a claim is delayed

Under the Insurance Act 2015 and FCA rules, insurers must handle claims promptly and fairly. If a claim is taking longer than expected:

1. Ask the insurer’s bereavement team for a written update and an estimated timeline.
2. If you remain unsatisfied after eight weeks, you can raise a formal complaint with the insurer.
3. If the insurer’s complaints process is exhausted (or eight weeks have passed without resolution), escalate to the Financial Ombudsman Service. The FOS can order payment plus compensation for distress.

What happens when there is no named beneficiary?

If a policy is not in trust and no beneficiary is named on the policy:

• The payout forms part of the estate.
• It is distributed according to the will (or intestacy rules if there is no will).
• Probate is almost certainly required before the insurer will pay out.

Intestacy rules in England and Wales mean the estate passes first to a spouse or civil partner, then to children, then to other relatives in a set order. If the deceased had no surviving relatives, the estate (including the insurance payout) passes to the Crown as bona vacantia. Source: GOV.UK – intestacy: who inherits if someone dies without a will, verified June 2026.

Scotland and Northern Ireland have different intestacy rules. If the deceased lived in Scotland, the rules of prior rights and legal rights apply – seek advice from a Scottish solicitor.

Common gotchas

Most claims pay out without difficulty, but there are several situations where problems arise. It is worth checking these before you assume a payout will follow automatically.

Lapsed policy

If the policyholder missed premium payments and the policy lapsed before they died, the cover will have ended. The insurer may have sent warning letters. Check any correspondence from the insurer, and check bank statements for when the direct debit stopped.

Non-disclosure on the original application

When life insurance is applied for, the applicant must answer health and lifestyle questions honestly. If the insurer discovers that material information was withheld or misrepresented – for example, a pre-existing condition or a history of smoking – they may be entitled to decline the claim, reduce the payout, or void the policy entirely. This is most likely to come up when the cause of death is related to the undisclosed condition.

Under the Consumer Insurance (Disclosure and Representations) Act 2012, the insurer’s remedy depends on whether the non-disclosure was deliberate, reckless, or careless. A careless misrepresentation may result in a reduced payout rather than a full refusal. Source: Financial Conduct Authority – insurance non-disclosure.

Contestability period

For the first one to two years after a policy is taken out (the contestability period), the insurer has broader grounds to investigate and potentially decline a claim. This is standard across most UK life policies. After that period, the insurer’s ability to contest a claim on non-disclosure grounds is significantly reduced. If the policy is more than two years old, a non-disclosure is much less likely to result in a declined claim unless it was clearly fraudulent.

Suicide exclusions

Some life insurance policies include a clause excluding suicide-related deaths within the first 12 to 24 months of the policy. After that period, most policies pay out regardless of the cause of death. If you are dealing with a bereavement in these circumstances, the insurer’s bereavement team can advise on the specific policy terms. This is a difficult conversation, and most insurers handle it sensitively.

Terminal illness payout already made

If a terminal illness benefit was paid out before the person died, the life insurance policy is considered settled – there will be no further payment on death. Check with the insurer if you are unsure whether a claim was previously made.

Over-50s waiting periods

As noted above, over-50s plans typically do not pay the full sum if the policyholder dies within the first year or two. The insurer will return the premiums paid instead. This is not a refusal to pay – it is a standard policy term – but it is worth knowing before submitting the claim.

If you cannot find the policy

It is common for people not to know whether their loved one had a life insurance policy, or with which provider.

Start by:

• Checking bank statements for regular premium payments to an insurer
• Looking in physical files for a policy document or any correspondence from an insurer
• Contacting the deceased’s financial adviser or solicitor, if known
• Checking the deceased’s email inbox for policy renewal notices or correspondence

If those steps draw a blank, two services can help.

ABI tracing service. The Association of British Insurers offers a free policy tracing service that searches across ABI member insurers. You provide details about the deceased and the service checks whether a matching policy exists.

Unclaimed Assets Register. The Unclaimed Assets Register (UAR) is a paid service that searches for dormant insurance policies, investments, and bank accounts. A search costs £25. It covers policies held by participating insurers and financial institutions. Visit unclaimedassets.co.uk to start a search.

There is no time limit on making a claim. Policies do not expire just because nobody claimed them – but the insurer will not proactively pay out. You need to initiate contact.

What happens to unclaimed policies after many years. If the insurer is notified of the policyholder’s death but the proceeds remain unclaimed for 15 years, the money is transferred to charity through the government’s Dormant Assets Scheme. This does not extinguish the claim – beneficiaries can still recover the funds through the scheme – but it is a reason to act rather than delay.

If the policy paperwork is missing entirely

If you find a policy but cannot locate the original documents, contact the insurer directly. Insurers can usually verify the policy on their system using the policyholder’s name and date of birth. A missing policy document is not grounds to refuse a valid claim.

What if the insurer no longer exists?

If the insurer has closed down or merged with another company, the policy may still be valid. The ABI tracing service covers insurers that have changed name or been taken over. If the insurer failed (became insolvent), the Financial Services Compensation Scheme (FSCS) may be able to help.

For life insurance policies issued by UK-authorised insurers that failed on or after 3 July 2015, the FSCS provides 100% protection – the full claim value. For policies with insurers that failed before that date, protection was 90% of the claim. The FSCS can fund a replacement policy with a solvent insurer or pay out the claim directly. Search the FSCS website by company name to check whether the insurer is covered.

UK life insurer payout rates (2023)

If you are assessing the reliability of a specific insurer, the following payout rates from 2023 show the percentage of life insurance claims each paid:

Source: individual insurer claims statistics reports, 2023. Note that payout rates vary year to year. A lower rate does not necessarily reflect a tendency to decline valid claims – it can reflect the mix of policy types and the circumstances of claims in a given year.

Common questions

Does life insurance pay out if there’s a mortgage?

Yes – if the policy was a mortgage protection or term life policy, the payout can be used to pay off the outstanding mortgage balance. For more detail, see our guide to what happens to a mortgage when someone dies.

Does life insurance form part of the estate?

Only if the policy was not written in trust. A trust-held policy pays directly to named beneficiaries and does not form part of the estate. A policy not held in trust pays into the estate, goes through probate, and is subject to inheritance tax if the estate is over the threshold.

Is a life insurance payout taxable?

The payout itself is not subject to income tax or capital gains tax. The only tax risk is inheritance tax, and only if the policy is not in trust and the estate exceeds the nil-rate band. See inheritance tax for full details.

What if the policyholder forgot to name a beneficiary?

If a policy is not in trust and no beneficiary is named, the payout forms part of the estate and is distributed according to the will (or intestacy rules if there is no will). See the section above on what happens when there is no named beneficiary.

What if there is no will?

If the deceased died intestate (without a will), the payout from a non-trust policy goes into the estate and is distributed according to UK intestacy rules. See GOV.UK – who inherits if someone dies without a will. Trust-held policies are unaffected by the absence of a will – they pay to named beneficiaries regardless.

Can a life insurance claim be refused?

Yes, though it is rare: 3.5% of claims were declined in 2024. The most common reasons are non-disclosure of medical information on the original application, a lapsed policy (premiums not paid), and the death occurring during an excluded period (e.g., suicide within the first year or two). The insurer must give a written reason for any refusal. You can challenge the decision via the insurer’s complaints process and, if unresolved, the Financial Ombudsman Service.

Does life insurance cover death abroad?

Most UK life insurance policies pay out regardless of where in the world the death occurs. However, some policies exclude deaths in specific high-risk regions or during certain activities (extreme sports, active military service). Check the policy exclusions section. If the deceased had a policy issued by an overseas insurer rather than a UK insurer, see the section on overseas policies above.

What about workplace pension death benefits?

Workplace pension death benefits work differently from life insurance. Pension scheme trustees hold discretionary powers to decide who receives the death lump sum, guided by (but not bound by) the member’s nomination form. For a full explanation, see our guide to what happens to a pension when someone dies.

Can I claim on behalf of someone else?

Yes. If you are the executor of the estate or a named trustee, you can initiate a claim on behalf of the estate or the beneficiaries. If you are next of kin but not formally appointed as executor or trustee, you can still contact the insurer to locate the policy – but the insurer cannot release funds to you without the relevant legal authority.

What happens if the insurer has gone bust?

If a UK-authorised insurer has failed, the Financial Services Compensation Scheme can step in. For life insurance policies, FSCS protection is 100% of the claim value for insurers that failed on or after 3 July 2015. Check the FSCS website by company name. If the insurer has been taken over or merged (rather than failed), the acquiring company inherits the policy obligations and your claim should proceed normally.

Does ISA savings count as life insurance?

No – ISA savings are separate assets. If the deceased held a stocks and shares ISA or cash ISA, those assets are handled differently. See our guide to what happens to an ISA when someone dies.

What happens to a joint bank account when someone dies?

Joint bank accounts typically pass automatically to the surviving account holder outside of probate. See our guide to what happens to a joint bank account when someone dies for the full process.

While you are reviewing finances after a bereavement, it is also worth checking whether the surviving family is entitled to Bereavement Support Payment – a tax-free benefit for surviving spouses and civil partners worth up to £9,800.

For specific insurer contact details and processes, we have dedicated guides for the most common UK life insurance providers:

• Aviva – how to notify Aviva when someone dies (phone: 0800 015 1142)
• Legal & General – how to notify Legal & General when someone dies (phone: 0800 137 101)
• Royal London – how to notify Royal London when someone dies (phone: 0345 646 2094)
• LV= – how to notify LV= when someone dies
• Sun Life – how to notify Sun Life when someone dies (phone: 0800 008 6060)
• AXA – how to notify AXA when someone dies

If the deceased held a life insurance policy sold through Direct Line (underwritten by Aviva, Legal & General, or Countrywide Assured depending on the date), see our guide to notifying Direct Line when someone dies for the correct contact number by policy period.

Sources: Association of British Insurers – protection claims 2024; ABI – tracing an insurance policy; ABI – life insurance claims guidance; ABI – joint life last survivor glossary; Legal & General – life insurance claims; Legal & General – life insurance trusts; GOV.UK – inheritance tax; GOV.UK – intestacy rules; GOV.UK – HMRC HS321 foreign life insurance policies; ABI – group life cover; FCA – insurance non-disclosure; Consumer Insurance (Disclosure and Representations) Act 2012; FSCS – insurance protection; GOV.UK – Dormant Assets Scheme. All figures verified June 2026.