What are the advantages and disadvantages?

Potential advantages of writing a policy under a trust

• Avoidance of Probate - Immediate payment of the policy proceeds can be made on production of a deal certificate, without awaiting probate (confirmation in Scotland). This means that the policy proceeds should be paid promptly on death, rather than the frustrating alternative of your dependants being unable to obtain the proceeds for what may be months.
• Inheritance Tax - Any policy benefits paid out on death are outside of your estate for inheritance tax purposes and pass tax-free to your chosen beneficiaries at the appropriate time. Premiums paid under trust policies are gifts for inheritance tax purposes but are usually covered by one of the available exemptions. There is unlikely to be a tax charge if a protection life insurance policy is the only asset of the trust.
• Flexibility and a degree of control - A 'discretionary' trust is a versatile personal and financial planning vehicle. You will need to act in unison wit the other trustees, during your lifetime you will have a leading say in the administration of the trust.

Potential disadvantages of writing a policy under a trust

• Once created a trust cannot be cancelled. It will of course come to an end if the policy stops without a benefit being paid out
• The creation of a trust may affect your personal circumstances, particularly your tax position and professional advice should be sought before creating a trust

What types of Tesco Trusts do you offer?

We offer two different types of trust:

• Discretionary Trust for existing policies - This trust is suitable for Tesco Life insurance and Tesco Over 50s Plan policies. It allows you to ensure that all death benefits are paid to your trustees for the benefit of your chosen beneficiaries.
• Discretionary Trust disability benefits reserved for existing policies - This trust is suitable for Tesco Life insurance with Critical Illness Cover policies. All death benefits are paid to your trustees for the benefit of your chosen beneficiaries. Critical illness and disability benefit would be paid to you.

How do I set up a Trust?

Call us on 0845 309 2933 to see how you can make a difference to those you care about:

What happens next?

We will send you a trust form, for you and your co-trustees to complete and sign. You will need to make sure it meets your needs and you may wish to consider taking professional advice if you have any doubts about this.

The completed trust form should be returned to us. For full details please read the guide to trusts document [PDF, 71KB].

In the meantime you may wish to consider

• Who you want to be a trustee and provide the name of one or two trustees in addition to yourself
• Who you want to be the beneficiaries (there must be at least one) and provide the name of this person
• The percentage of the Life Insurance payment you'd like each beneficiary to receive (shares must add up to 100%)