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, what documents you need, how long it takes, and what to do first. It covers term life insurance, whole-of-life policies, over-50s plans, and employer death-in-service benefits.
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, 99.6% of life insurance claims are paid out. The process is generally straightforward.
| Policy type | Where the payout goes | Does it go through probate? | IHT risk? |
|---|---|---|---|
| Policy written in trust | Directly to named beneficiaries | No – bypasses probate | No – outside the estate |
| Policy not in trust | Into the estate | Usually yes | Yes – if estate exceeds threshold |
| Joint life policy (first death) | To the surviving policyholder | No | Depends on policy setup |
| Over-50s plan (no medical) | To the estate (usually) | Depends on trust status | Depends on estate value |
| Employer death in service | Via employer’s nominated beneficiary | Usually no – trustee-held | Usually no |
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:
- 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.
- 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.
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 April 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.
Joint life insurance policies
Joint life policies cover two people – usually a couple – and 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 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.
Some couples opt instead for two separate single policies. This is more expensive in the short term but means both remain covered after one partner dies.
Types of life insurance policy – does the claims process differ?
The basic claims process is the same for all policy types: contact the insurer, provide documents, submit the claim form. However, there are some practical differences.
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).
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 practical 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. In many cases, the insurer can settle within 24 hours of a valid claim being received. Source: Legal & General – over-50s life insurance payouts.
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 (not necessarily as a result of work), 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. After two years, a tax charge of up to 45% applies. So notifying the employer promptly matters.
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’ tracing service can help: abi.org.uk. There is no time limit on making a claim.
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
Step 3: Gather the documents
You will typically need:
| Document | Where to get it | Notes |
|---|---|---|
| Death certificate | Funeral director or register office | Request several certified copies – most organisations need the original |
| Completed claim form | From the insurer (post or online) | Insurer will usually send this to you |
| Original policy document | Among the deceased's papers | If lost, the insurer can often work without it |
| Grant of probate (if required) | Probate Registry | Only needed if policy is not in trust – insurer will confirm |
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.
Common questions
How long does a life insurance claim take?
On average, insurers pay out within 30 days of a valid claim being submitted. Some pay within days. Delays occur when: documentation is incomplete, the policy was recently taken out and the death may trigger a standard review, or the circumstances of death require investigation. The insurer should keep you updated. Source: Insurance Hero – how long do life insurance claims take.
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. The insurer pays the beneficiary (or directly to the lender, if the policy is specifically linked). 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). If there is neither a will nor an obvious beneficiary, the insurer may require probate before releasing the funds, and the court oversees distribution.
What about workplace pension death benefits – are they different?
Yes. 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.
If you cannot find the policy
It is surprisingly 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
- Looking in any physical files for a policy document or correspondence
- Contacting the deceased’s financial adviser or solicitor, if known
- Using the ABI’s unclaimed assets tracing service
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.
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.
If the deceased held life insurance, a pension, or investments with Aviva, see our dedicated guide on how to notify Aviva when someone dies for the specific contact details and process for each product type.
If the deceased held a Royal London life insurance or pension policy, see our guide to notifying Royal London when someone dies for the correct contact numbers and claim process.
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 – life insurance claims; Marie Curie – claiming on life insurance; Legal & General – life insurance claims; Legal & General – life insurance trusts; GOV.UK – inheritance tax; ABI – group life cover. All figures verified April 2026.