You bought life insurance to protect them.
So many people are led to believe that buying a policy is all that’s needed.
But without the right planning, your life insurance won’t do what you intend it to do.
So, what could go wrong?
Without the right planning in place, your life insurance payout would become entangled with the rest of your estate, leading to four significant issues that most people would prefer to avoid:
Real People, Real Consequences
It’s not just about delays, deductions and tax.
There are plenty of situations when setting up a Trust can make all the difference in how your life insurance payout is handled any why it should be an essential part of your life insurance planning. Here are just a few key examples to consider.
If you have children under the age of 18 that you want looking after if you die but you don’t have the right planning in place, the policy provider will send the money to your estate where it will be dealt with by your Will. If you don’t have a Will, the money may have to be looked after by the courts until your children are 18 – at which point they are given it all in one go – not ideal for an 18 to receive lots of cash in one go!
Family dynamics can get complicated, right? If you’re divorced or part of a blended family, life insurance payouts can be a potential minefield. Without a clear plan, the courts could end up deciding who gets what, which might not match your vision for how your loved ones should be supported. Imagine your ex-partner having a say over your payout, or your stepchildren being unintentionally left out—awkward, to say the least.
Worse yet, disputes between family members could arise, delaying the payout or even leading to legal battles. The last thing you’d want is for your loved ones to deal with unnecessary stress during an already difficult time. Proper planning ensures that your payout goes to the people you truly care about, exactly how and when you want it to.
If you’re in a long-term relationship but not married, life insurance payouts can get unexpectedly complicated. Legally, your partner might not be considered your next of kin, which means they could be excluded from receiving your payout altogether. Instead, the funds could go to distant relatives or someone you might not have intended, definitely not what you had in mind, right?
Without the right planning in place, your partner could be left to navigate legal hurdles or even face financial strain, all while dealing with the emotional weight of the loss. On top of that, delays and disputes over who should receive the payout could create unnecessary stress during an incredibly challenging time.
Managing debts or complex finances can affect life insurance payouts. Loans, credit card balances, and other obligations may impact what your beneficiaries receive. Complex financial arrangements, like shared business ventures, can also cause challenges such as disputed claims or creditor interventions.
When couples share a joint policy and tragically pass away simultaneously, the absence of clear succession planning can create significant hurdles. Without naming a ‘next in line’ or contingent beneficiaries, the payout may enter a legal grey area, leaving your children, who are often the intended recipients, vulnerable to delays or disputes.
This issue becomes even more concerning if your children are under 18. (See above)
Even the best policy can cause problems without this simple extra step.
Genie will guide you in creating a Trust tailored to your unique situation, helping you consider every detail to avoid common pitfalls and secure your loved ones’ future.
What a Trust Changes
Putting your policy into a Trust means:
Why Haven’t You Heard This Before?
Insurance companies have consistently offered a whole range of trusts to their clients and brokers have often informed people that these options are available. However, the process of setting up a trust has been largely a complicated process that has lacked the necessary guidance to pick the right trust. Getting that advice costs significant fees to achieve which all leads to confusion. It’s no wonder so many policies are at risk.
Recognising this, the FCA has highlighted the need for improvement in this area. That’s where Genie comes in, helping insurers, advisers bridge the gap by simplifying the process and providing the clarity that’s often been missing for policyholders. This innovation has been warmly welcomed by both the industry and clients as an invaluable solution to an important need.
Don’t leave the job unfinished
If you’ve already taken the step to protect your family with life insurance, don’t leave it unfinished.
Genie helps you complete the job, in just a few minutes.