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How Life Insurance Payouts Work With a Will in the UK

· 31 min

Note: The following scenario is fictional and used for illustration.

Emma, 38, a marketing manager from Leeds, spent £650 on a professionally solicitor-drafted will naming her husband, Tom, as sole beneficiary of her £340,000 estate. She also had a £250,000 life insurance policy through work. When Emma updated her will after their second child was born, she assumed everything—including the life insurance—would go to Tom and the children as specified in her new will.

What Emma didn't realize: She'd never updated the beneficiary designation on her life insurance policy, which still listed her mother from when she first took out the policy at age 24. When Emma died unexpectedly in 2023, her mother received the £250,000 life insurance payout despite the will's clear instructions. Tom received the rest of the estate but faced a 12-month probate process. The life insurance could have paid out within weeks—but to the wrong person.

Emma's story isn't unique. According to a 2023 Swiss Re report, fewer than one in five (17%) of new life policies in the UK were written in trust, meaning most policyholders don't understand how their policy interacts with their estate. With term life insurance claims taking 53-122 days to process according to a Financial Conduct Authority review, and probate timelines stretching to 6-12 months, understanding the relationship between life insurance and wills is critical.

This article explains exactly how life insurance interacts with your will, when beneficiary designations override your estate instructions, and how to coordinate both to protect your family.

Table of Contents

Does a Life Insurance Beneficiary Override a Will in the UK?

Yes, a named beneficiary on a life insurance policy overrides your will in the UK. If you've named someone as a beneficiary on your policy, they'll receive the payout regardless of what your will says. The only exception is if the policy is written in trust, in which case the trust beneficiaries take precedence over both the policy beneficiary and your will.

A beneficiary designation is a contractual obligation between you and your insurer. It operates independently of your will—even if your will says something different, the named beneficiary receives the payout. The only way to change a beneficiary is to contact your insurer directly and update the policy.

This surprises many people who assume their will controls all their assets. But life insurance follows different rules because it's a contractual obligation between you and the insurer, not an estate asset. Your will cannot override a beneficiary designation—you must update the policy directly.

Consider David's situation. In 2018, he named his daughter as life insurance beneficiary on his £180,000 policy. In 2024, he wrote a will leaving "all assets" to his new wife, Sarah. When David died later that year, his daughter received the £180,000 life insurance payout. Sarah received only the estate assets per the will. David's will couldn't change the beneficiary designation—he would have needed to contact his insurer directly.

Or Sarah's case, which shows how trusts add another layer. She placed her £200,000 policy in trust for her two children in 2020. Her will later named her husband as sole beneficiary of her estate. When Sarah died, her children received the £200,000 life insurance via the trust within three weeks. Her husband received the estate assets per the will. The trust overrode both the policy beneficiary designation and the will.

According to the Financial Conduct Authority review reported by Which?, term life insurance claims take 53-122 days to process on average, with higher payouts subject to stricter medical checks. In contrast, policies written in trust can pay out within days once the death certificate is issued, as trustees don't need to wait for probate.

The legal hierarchy is clear: beneficiary designation → trust beneficiaries → will → intestacy rules. Understanding this order is essential for ensuring your life insurance goes where you intend.

What Happens to Life Insurance When There's No Named Beneficiary?

If you don't name a beneficiary on your life insurance policy, the payout becomes part of your estate. This changes everything about how and when the money is distributed.

When life insurance enters your estate, it follows the same rules as your other assets. If you have a valid will, it's distributed according to your will's instructions. If you don't have a will, intestacy rules determine who inherits.

Here's what happens when life insurance becomes an estate asset:

  1. The payout must go through probate, which typically takes 6-12 months
  2. It may be subject to 40% inheritance tax if your estate exceeds £325,000
  3. Your executor needs a grant of probate before they can claim the money
  4. The payout becomes public record as part of your estate
  5. Distribution follows will instructions or intestacy hierarchy

James, 42, took out a £150,000 policy through his employer but never filled in the beneficiary section. When he died, the payout went to his estate. His estate total was £380,000—£55,000 over the £325,000 nil-rate band. His beneficiaries paid £22,000 in inheritance tax (40% of £55,000) and waited nine months for distribution. If James had named a beneficiary, they would have received the full £150,000 within weeks, with no inheritance tax.

The consequences are even more severe for unmarried couples. Mark and Lisa lived together for 15 years and jointly owned their £450,000 home. Mark had a £100,000 life insurance policy with no beneficiary and no will. When Mark died, Lisa inherited half the house through joint tenancy but received nothing from the life insurance. Under intestacy rules, the £100,000 went to Mark's parents—even though Mark and Lisa had shared a life for 15 years.

According to Citizens Advice, unmarried partners receive nothing under intestacy rules, regardless of relationship length. Common law marriage isn't recognized in UK law.

Without a named beneficiary, your life insurance becomes an estate asset subject to probate, inheritance tax, and will or intestacy distribution rules. This turns a financial safety net that should provide quick support into a delayed, taxed, legally complex process.

How Life Insurance Trusts Change the Rules

A life insurance trust is a legal arrangement where trustees—not you—own the policy, and beneficiaries are named in the trust document. It's the most powerful estate planning tool for life insurance because it bypasses both your will and probate entirely.

Here's the legal hierarchy: trust beneficiaries override policy beneficiaries, which override will instructions, which override intestacy rules. A trust sits at the top of this chain.

Writing your policy in trust creates three key advantages. First, it bypasses probate entirely. Trustees can claim and distribute the payout within days of receiving the death certificate—no grant of probate needed. Second, it removes the payout from your estate, avoiding inheritance tax. Third, it protects unmarried partners who would receive nothing under intestacy rules.

There are three main types of life insurance trusts in England and Wales. A discretionary trust lets trustees decide how to distribute the payout among beneficiaries. A bare trust names fixed beneficiaries who automatically receive their share. An interest in possession trust gives income to one person and capital to others.

One critical consideration: once a policy is in trust, you cannot reverse it. The policy no longer belongs to you—it belongs to the trustees for the benefit of the beneficiaries.

Sophie, 45, placed her £300,000 policy in discretionary trust for her three children. When she died, her estate value was £450,000—£125,000 over the nil-rate band. Without the trust, her beneficiaries would have paid £50,000 inheritance tax on the life insurance (40% of £125,000). With the trust, the £300,000 stayed outside her estate. Her children received the full amount tax-free within three weeks, and the estate paid tax only on the £150,000 excess.

For cohabiting couples, trusts solve the intestacy problem. Rachel and Tom owned their £380,000 home together but weren't married. Rachel placed her £200,000 policy in trust naming Tom as beneficiary. When Rachel died, Tom received £200,000 within three weeks—no probate, no intestacy complications. Without the trust, Tom would have received nothing from the life insurance under intestacy rules.

According to the Swiss Re 2023 report, only 17% of UK life insurance policies are written in trust. This means approximately 83% of policyholders are missing out on significant tax savings and probate avoidance.

The inheritance tax rate is 40% on estates exceeding £325,000, and this threshold is frozen until April 2031. As property values rise and the threshold remains static, more estates will face inheritance tax liability unless life insurance is placed in trust.

Here's how named beneficiaries compare to trusts:

Feature Named Beneficiary Only Policy in Trust
Payout Speed 53-122 days (term insurance) 2-3 weeks
Probate Required No No
Part of Estate Yes (subject to IHT) No (IHT-free)
Can Be Changed in Will No No
Protects Unmarried Partners Yes Yes
Irrevocable No (can change beneficiary) Yes (cannot remove trust)

The trust option provides the fastest payout, complete inheritance tax avoidance, and protection for unmarried partners—but it's permanent. Weigh the benefits against the loss of flexibility before placing your policy in trust.

Does Life Insurance Go Through Probate in the UK?

Life insurance bypasses probate if there's a named beneficiary or the policy is in trust. It only goes through probate when the payout becomes part of your estate—which happens when there's no beneficiary designation.

Probate is the legal process of obtaining authority to administer someone's estate. In England and Wales, personal representatives need either a grant of probate (if there's a will) or grant of letters of administration (if there isn't) before they can distribute estate assets.

This process takes time. According to Legal & General and Citizens Advice, average probate timelines run 6-12 months for standard estates. Online applications can be processed within two weeks, but complex estates or paper applications can take 15 weeks or longer just to receive the grant.

Probate also creates other complications. It makes your estate a matter of public record—anyone can view the contents of your will and the value of your estate. It adds legal and solicitor fees. It delays when beneficiaries receive financial support during an already difficult time.

Michael, 50, had a £180,000 life insurance policy with his wife named as beneficiary. When he died, his wife submitted the death certificate to his insurer and received £180,000 in eight weeks. No probate needed. The money arrived while she was still making mortgage payments and covering immediate expenses.

Jennifer, 39, had a £200,000 policy with no beneficiary. When she died, her executor had to apply for grant of probate—a four-month process. Then the executor could claim the life insurance. Then the money could be distributed per her will. Total timeline: ten months. Her family struggled financially during the wait, exactly when life insurance should have helped most.

According to Legal & General, if a policy is written in trust, trustees can claim the payout within days of the death certificate being issued. They don't need probate because they own the policy—not the deceased.

The difference is stark: 2-3 weeks with a trust, 53-122 days with a named beneficiary, or 6-12 months through probate with no beneficiary. Each step down this ladder adds months of delay and financial uncertainty for your loved ones.

If your life insurance policy names beneficiaries or is in trust, it bypasses probate entirely. Your loved ones receive the money in weeks, not months—exactly when they need it most.

Life Insurance and Inheritance Tax: What You Need to Know

Life insurance counts toward your estate for inheritance tax purposes unless it's written in trust. This matters enormously for estates approaching or exceeding the £325,000 nil-rate band.

The nil-rate band is £325,000 as of April 2025. There's an additional residence nil-rate band of £175,000 if you're passing your main residence to direct descendants. This creates a total threshold of £500,000 for individuals or £1 million for married couples.

Anything above these thresholds faces 40% inheritance tax. And critically, both bands are frozen until April 2031, meaning more estates will cross into taxable territory as property values rise.

If your life insurance isn't in trust, it's counted as part of your estate. This can push you over the threshold and create a significant tax bill.

Consider an estate without a trust:

  • Property: £350,000
  • Savings: £100,000
  • Life insurance: £200,000
  • Total estate: £650,000

Inheritance tax calculation:

  • Estate value: £650,000
  • Nil-rate band: -£325,000
  • Taxable amount: £325,000
  • Tax at 40%: £130,000

Amount to beneficiaries after tax: £520,000

Now the same estate with life insurance in trust:

  • Property: £350,000
  • Savings: £100,000
  • Life insurance (in trust): £200,000 (not counted in estate)
  • Estate value for IHT: £450,000

Inheritance tax calculation:

  • Estate value: £450,000
  • Nil-rate band: -£325,000
  • Taxable amount: £125,000
  • Tax at 40%: £50,000

Amount to beneficiaries:

  • Estate after tax: £400,000
  • Life insurance (tax-free): £200,000
  • Total: £600,000

Tax saved by using trust: £80,000

This isn't a theoretical saving. It's £80,000 more for your children or partner—simply by placing life insurance in trust before you die.

The tax implications become even more significant when you consider whole-of-life versus term insurance. Term insurance pays out only if you die within the policy term. Whole-of-life insurance pays out whenever you die, making it more relevant for inheritance tax planning. If you're certain your estate will exceed £325,000, whole-of-life insurance in trust can provide tax-free capital to cover the inheritance tax bill on your other assets.

According to gov.uk, married couples and civil partners can combine their allowances, creating a potential £1 million threshold (£325,000 × 2 plus £175,000 × 2 for residence nil-rate band). But this still requires proper planning—life insurance must be in trust to stay outside the estate.

If your estate is likely to exceed £325,000 (or £500,000 with residence nil-rate band), placing life insurance in trust could save your beneficiaries tens of thousands in inheritance tax. The process is typically free through your insurer and takes minutes to set up.

Special Situations: Unmarried Couples, Divorce, and Blended Families

Life insurance and will coordination becomes critical—and complicated—in three situations: unmarried couples, divorce and remarriage, and blended families. These scenarios are where misalignment causes the most harm.

Unmarried Couples

Common law marriage is a myth in UK law. According to Citizens Advice, unmarried partners receive nothing under intestacy rules, regardless of how long you've lived together. If you die without a will and without naming your partner as a life insurance beneficiary, they get nothing from either.

Lisa and Marcus lived together for 12 years and owned a £450,000 home as joint tenants. Lisa had a £150,000 life insurance policy with no beneficiary and no will. When Lisa died, Marcus inherited half the house through joint tenancy. But the £150,000 life insurance went to Lisa's parents under intestacy rules. Marcus faced the choice of buying out Lisa's parents or selling the home they'd shared for over a decade.

For unmarried couples, you need both: name your partner as life insurance beneficiary AND write a will leaving your estate to them. Better yet, place your life insurance in trust for your partner to avoid probate and inheritance tax.

Divorce and Remarriage

Divorce doesn't automatically remove your ex-spouse as beneficiary on your life insurance policy. You must update the policy manually with your insurer. And remarriage revokes your previous will—meaning if you remarry and don't write a new will, your new spouse inherits under intestacy, not your old will.

But remarriage doesn't affect life insurance beneficiary designations. If your ex-spouse is still named, they receive the payout—even if you've remarried and written a new will.

Simon divorced in 2020 but never updated his £250,000 work life insurance, which still listed his ex-wife as beneficiary. He remarried in 2023 and wrote a new will leaving everything to his new wife, Claire. When Simon died in 2024, his ex-wife received the £250,000 life insurance payout. Claire received only the estate assets. Simon's will couldn't override the beneficiary designation he'd forgotten about for four years.

The critical timing is this: update your policy beneficiary AND write a new will after divorce or remarriage. Don't assume one handles both.

Blended Families

Blended families create potential conflict between new spouses and children from previous marriages. Life insurance to a new spouse might leave children with nothing, or vice versa.

Karen had two children from her first marriage and remarried Paul. She wanted to provide for both Paul and her children. She placed her £200,000 policy in discretionary trust with instructions: 50% to Paul, 25% to each child. This prevented conflict between her spouse and children from her earlier marriage. The trust allowed her to specify exactly how the payout would be split—something harder to achieve with simple beneficiary designations.

Trusts are especially valuable for blended families because they allow nuanced distribution. You can provide income to a spouse during their lifetime, then capital to your children after your spouse dies. Or split payouts among multiple beneficiaries with specific percentages.

Minor Beneficiaries

If you name a child under 18 as a direct beneficiary, they cannot receive the payout until they turn 18. The money is held in trust or managed by a court-appointed guardian—often creating delays and expenses.

Paula named her eight-year-old son as beneficiary of her £150,000 policy. When she died, the £150,000 was held in court-managed trust until her son turned 18—ten years later. The money couldn't help with immediate expenses like education or living costs, and court-appointed management added legal fees. If Paula had used a trust with adult trustees, they could have managed the money for her son's benefit immediately.

According to the Office for National Statistics, 42% of marriages in England and Wales end in divorce. With high divorce rates, remarriage, and cohabitation all common, reviewing life insurance beneficiaries after major life changes is essential.

If you're unmarried, divorced, or remarried, check both your life insurance beneficiaries AND your will. Legal changes like divorce don't automatically update your policy—you must do it manually.

How to Coordinate Your Life Insurance and Will

Coordinating your life insurance and will requires six steps. This checklist ensures both documents work together to protect your family.

Step 1: Review Your Current Life Insurance Beneficiaries

Contact every insurer where you hold a policy—workplace life insurance, personal term or whole-of-life policies, mortgage protection insurance. Request current beneficiary designation documentation in writing.

Check for outdated names. Ex-partners who should no longer inherit. Deceased relatives who can't receive the payout. Parents named when you were 25 but now have a spouse and children. These outdated beneficiaries are common and costly.

Step 2: Decide on Beneficiary Strategy

You have three options for each policy.

Option A: Name specific beneficiaries on the policy. This is fast, simple, and avoids probate. The beneficiary receives the payout directly from the insurer within weeks. But the payout is part of your estate for inheritance tax purposes.

Option B: Place the policy in trust. This avoids both probate AND inheritance tax. It's the best option if your estate is likely to exceed £325,000. The payout arrives within 2-3 weeks and isn't taxed. But it's irrevocable—you cannot reverse a trust once created.

Option C: No beneficiary, distribute via will. This is slower—the payout goes through probate and faces potential inheritance tax. It could take 6-12 months to distribute. This option only makes sense if you need the payout to form part of your residuary estate for specific distribution reasons.

Step 3: Consider Inheritance Tax Implications

Calculate your current estate value. Add up property, savings, investments, pensions, and life insurance.

If your estate is likely to exceed £325,000 (or £500,000 with residence nil-rate band), you'll face 40% inheritance tax on the excess. Life insurance in trust removes the payout from your estate, potentially saving tens of thousands in tax.

If your estate is complex or near the threshold, consult a financial advisor. They can model different scenarios and recommend the most tax-efficient structure.

Step 4: Write or Update Your Will

Even if your life insurance is in trust or has named beneficiaries, mention the policies in your will for your executor's reference. Include policy numbers, insurer contact information, and location of trust documents.

This documentation helps your executor understand the full picture of your estate. They'll know which assets go through the will and which bypass it via beneficiary designation or trust.

Ensure your will beneficiaries align with your overall estate plan. Consider the total value each person receives from all sources—life insurance, estate assets, pension death benefits, jointly owned property. You may want to adjust will bequests to balance what beneficiaries receive from life insurance.

Step 5: Document Everything

Create a master list of all life insurance policies, beneficiaries, trust status, and insurer contact details. Include policy numbers and location of physical policy documents and trust deeds.

Share this list with your executor and trustees. Store it with your will and other estate planning documents. This list is invaluable when someone needs to make claims after your death—beneficiaries often don't know policies exist.

Step 6: Review Regularly

Review your life insurance and will after every major life event: marriage, divorce, birth of children, death of a beneficiary, or remarriage. Each of these changes may require updating beneficiaries, writing a new will, or creating trusts.

Even without major life changes, review every 3-5 years minimum. Estate values change as property appreciates, savings grow, or you take out new policies. Regular review ensures your beneficiaries and will remain aligned with your intentions.

Use this checklist to audit your current situation:

  • I have a current list of all my life insurance policies
  • I know who is named as beneficiary on each policy
  • My beneficiaries are who I intend (not outdated ex-partners or deceased relatives)
  • I understand whether each policy is in trust or not
  • I have calculated my total estate value including life insurance
  • I have considered inheritance tax implications
  • I have a valid will that mentions my life insurance policies
  • My executor knows where to find policy documents and trust paperwork
  • My will beneficiaries and life insurance beneficiaries align with my intentions
  • I have a plan to review this every 3-5 years or after major life changes

This systematic approach ensures your life insurance and will work together, not against each other.

Common Mistakes People Make With Life Insurance and Wills

Seven mistakes account for most life insurance and will coordination failures. Avoiding these protects your family from delays, disputes, and financial loss.

Mistake #1: Assuming the Will Controls Everything

Many people believe their will is the final word on all their assets. It's not. Beneficiary designations override will instructions every time.

The fix: Review and update beneficiaries directly with your insurer, not just in your will. Your will cannot change a beneficiary designation—only your insurer can process that update.

Mistake #2: Never Updating Beneficiaries After Major Life Changes

Robert named his mother as beneficiary when he was 25 and single. Now 45 with a wife and two children, he assumed his will covered it. When Robert died, his mother received the £200,000 life insurance payout instead of his family—exactly the opposite of what he wanted.

The fix: Review beneficiaries after divorce, remarriage, births, and deaths. Don't assume your old beneficiary designation still makes sense.

Mistake #3: Leaving Beneficiary Section Blank

Graham thought leaving the beneficiary section blank would be simpler—his will would handle distribution. When he died, his £180,000 payout went through 11-month probate, lost £22,000 to inheritance tax, and arrived too late to help his widow pay the mortgage.

The fix: Name at least one primary beneficiary and one contingent beneficiary. This ensures the payout avoids probate and inheritance tax.

Mistake #4: Naming Minor Children as Direct Beneficiaries

Paula named her eight-year-old son as beneficiary, thinking this protected him. When she died, the £150,000 was held in court-managed trust until her son turned 18—ten years away. The money couldn't help with immediate expenses, and court-appointed guardianship added legal fees.

The fix: Use a trust with adult trustees to manage money for minor beneficiaries. Trustees can use the funds for your child's benefit immediately—education, housing, living costs—rather than waiting until age 18.

Mistake #5: Ignoring Inheritance Tax Implications

Without considering inheritance tax, many people leave policies as estate assets. If your estate exceeds £325,000, you could lose 40% of the excess to tax—tens of thousands your beneficiaries will never receive.

The fix: Place life insurance in trust if your estate is near or above the threshold. This removes the payout from your estate and eliminates the inheritance tax liability.

Mistake #6: Not Telling Executor or Beneficiaries About Policies

Policies go unclaimed every year because beneficiaries don't know they exist. Insurers can't contact beneficiaries if they don't know the policyholder has died.

The fix: Document all policies in your will and share the list with your executor. Include insurer contact details and policy numbers. This ensures claims are made promptly after your death.

Mistake #7: Naming "My Estate" as Beneficiary

Some people name "my estate" as beneficiary thinking it simplifies things. It does the opposite. It forces probate, adds months of delay, creates inheritance tax liability, and makes the payout public record.

The fix: Name specific individuals or a trust. Life insurance is designed to bypass your estate—naming your estate as beneficiary defeats the purpose.

According to the Which? report on the FCA review, term insurance claims take 53-122 days on average. But these processing times only apply when beneficiaries are named. Estate payouts face much longer probate delays—6-12 months or more.

And according to the Swiss Re 2023 report, only 17% of UK policies are in trust. This means 83% of policyholders are missing inheritance tax savings and probate avoidance.

These seven mistakes are avoidable. Twenty minutes reviewing your beneficiary designations and coordinating with your will could save your family months of delay and thousands in unnecessary tax.

When to Seek Professional Advice

Some life insurance and will coordination is straightforward enough for DIY. But certain situations require professional guidance from financial advisors or solicitors.

When DIY Is Probably Fine

You can likely handle coordination yourself if your estate is simple, below £325,000, with straightforward family structure. If you're married or in a civil partnership leaving everything to your spouse then children, and you have standard life insurance with clear beneficiaries, DIY tools like WUHLD's online will platform can help you create a legally valid will that coordinates with your policies.

When You Should Consult a Financial Advisor

Seek financial advisor help if your estate value is near or exceeding the £325,000 nil-rate band. If you have significant life insurance that could trigger inheritance tax, an advisor can calculate exact liability and model different trust structures.

Financial advisors are also valuable when you're choosing between discretionary, bare, or interest in possession trusts. Each has different tax treatment and flexibility—an advisor can recommend which suits your circumstances.

If you're coordinating multiple policies—workplace life insurance, personal term or whole-of-life, mortgage protection—an advisor can help you understand how they interact with your overall estate plan.

Business owners or partners with life insurance elements also benefit from financial advice. Key person insurance, shareholder protection, and partnership insurance all have complex tax and estate planning implications.

When You Should Consult a Solicitor

Complex family situations require solicitor input: blended families with children from multiple marriages, estranged relatives you want to exclude, dependents with special needs who require ongoing care.

If there are disputes over existing life insurance payouts or challenges to beneficiary designations, you need legal representation. Solicitors can also advise on updating trust terms or dealing with irrevocable trusts created years ago that no longer fit your circumstances.

Cross-border issues—life insurance from overseas, beneficiaries living abroad, or international estate complications—require specialist legal advice. The interaction between UK and foreign tax law is complex.

If you're concerned about undue influence claims or capacity challenges to your will or trust, document your decision-making with solicitor support. This creates contemporaneous evidence of your intentions and mental capacity.

What Professionals Can Do

Financial advisors calculate inheritance tax liability under different scenarios, recommend trust structures based on your family situation, and model how different beneficiary arrangements affect your estate. They coordinate life insurance planning with pensions and investments for comprehensive wealth planning.

Solicitors draft trust deeds, write complex wills with multiple trusts or conditions, and provide legal advice on beneficiary rights and obligations. They can represent you in disputes and ensure your estate plan complies with current law.

Accountants advise on tax-efficient estate planning, coordinate with pension and investment planning, and help structure business succession where life insurance plays a role.

Cost Guidance

Financial advisor consultations typically cost £150-300 per hour. Solicitor will drafting ranges from £300-600 for straightforward wills to £1,000+ for complex estates. Trust deed drafting costs £500-1,500 depending on complexity.

WUHLD's online will costs £99.99 for straightforward estates with clear beneficiaries—significantly less than traditional solicitor fees but suitable only for less complex situations.

Red Flags That Need Professional Help

Seek professional help immediately if someone is contesting your beneficiary designation or trust, if your potential inheritance tax bill exceeds £50,000, if there are beneficiary disputes after the policyholder's death, or if there's uncertainty about mental capacity when the policy or trust was created.

According to Legal & General, life insurance and tax planning intersect in complex ways. Professional advice ensures you structure everything correctly and don't inadvertently create tax liabilities or legal complications.

For straightforward situations—married couples with simple estates below the inheritance tax threshold—DIY coordination is fine. For anything more complex, professional input can save your beneficiaries significant money and legal headaches.

Frequently Asked Questions

Does a life insurance beneficiary override a will in the UK?

Yes, in most cases a named beneficiary on a life insurance policy takes precedence over will instructions. If you've named someone as a beneficiary on your policy, they'll receive the payout regardless of what your will says—unless the policy is written in trust with different beneficiary arrangements. Your will cannot change or override a beneficiary designation on a life insurance policy.

Does life insurance go through probate in the UK?

Life insurance only goes through probate if there's no named beneficiary or the policy isn't in trust. If you've named beneficiaries or placed your policy in trust, the payout goes directly to them without probate—often within weeks. If the payout becomes part of your estate (no beneficiary, no trust), it must go through probate, which typically takes 6-12 months.

Can I put my life insurance policy in trust to avoid inheritance tax?

Yes, writing your life insurance policy in trust is one of the most effective ways to avoid inheritance tax on the payout. When a policy is in trust, the payout doesn't form part of your estate and isn't subject to the 40% inheritance tax if your estate exceeds £325,000. This means beneficiaries receive the full amount rather than losing up to 40% to tax.

What happens to my life insurance if I don't name a beneficiary?

If you don't name a beneficiary on your life insurance policy, the payout becomes part of your estate. It will be distributed according to your will (if you have one) or under intestacy rules (if you don't). This means the payout goes through probate, faces potential inheritance tax, and could take 6-12 months to distribute instead of weeks.

Can my unmarried partner inherit my life insurance in the UK?

Your unmarried partner can only inherit your life insurance if you've specifically named them as a beneficiary on the policy or in a trust. Common law marriage isn't recognized in UK law, so without a named beneficiary or trust, your partner receives nothing under intestacy rules—even if you lived together for decades. The payout would go to your spouse, children, parents, or siblings instead.

How long does it take to receive a life insurance payout in the UK?

If the policy is in trust with named beneficiaries, payouts typically arrive within 2-3 weeks after the death certificate is issued. Without a trust, term life insurance claims take 53-122 days on average, with stricter checks for higher payouts. If the payout must go through probate (no beneficiary), expect 6-12 months before distribution.

Should I include my life insurance policy in my will?

Only include your life insurance in your will if the policy isn't in trust and you haven't named beneficiaries directly on the policy. If you've placed the policy in trust or named beneficiaries through your insurer, the will has no control over the payout. However, you should document the policy's existence and location in your will for your executor's reference.

Conclusion

Key takeaways:

  • Named life insurance beneficiaries override your will—update beneficiaries directly with your insurer, not just in your will
  • Life insurance without a beneficiary becomes part of your estate, faces probate delays (6-12 months), and may be subject to 40% inheritance tax
  • Placing life insurance in trust is the most powerful strategy: avoids probate, eliminates inheritance tax, and protects unmarried partners
  • Review your life insurance beneficiaries after every major life change (marriage, divorce, birth of children) to ensure they match your intentions
  • Coordinate your life insurance and will to ensure your overall estate plan makes sense—consider who receives what from each source

Your life insurance exists to protect the people you love when you're gone. But if you've never updated the beneficiary designation or coordinated it with your will, it might not do what you expect. Take 20 minutes this week to check who's named on your policies—and make sure it's still the right answer.

Need Help with Your Will?

Understanding how life insurance and wills interact is the first step—but creating a will that coordinates with your policies is what actually protects your family. The checklist above helps you identify gaps, but your will is the legal document that ties everything together.

Create your will with confidence using WUHLD's guided platform. For just £99.99, you'll get your complete will (legally binding when properly executed and witnessed) plus three expert guides. Preview your will free before paying anything—no credit card required.

Legal Disclaimer:

This article provides general information only and does not constitute legal or financial advice. WUHLD is not a law firm and does not provide legal advice. Laws and guidance change and their application depends on your circumstances. For advice about your situation, consult a qualified solicitor or regulated professional. Unless stated otherwise, information relates to England and Wales.

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