Do you need to put your critical illness policy in trust?

If you've taken the steps to get your life insurance sorted and you’ve chosen a critical illness policy - let’s address one of the top questions asked about this policy.

What is critical illness cover?

Critical illness insurance is one of the most popular life insurance policies for a reason. This type of cover could help make a tough time a little easier on you, and your loved ones.

How it works is simple: if you were diagnosed with a critical illness as defined in your policy conditions, your cover could payout a one-off cash lump sum.

Combining your cover

When you take out critical illness cover with Busy Bee Life Insurance, we always recommend combining it with a life insurance policy.



When you have a life with a critical illness cover policy, you’ll be financially protected against death and becoming critically ill.

What is a trust form?

First things first, let's talk about what a trust form is.

In the simplest terms, a trust is a legal document that lets you have a say on what happens to the money from your life insurance policy after you're gone.

Why are trust forms so important?

Sure, placing your life insurance policy into a trust isn't a requirement - it's more like an upgrade to first class in your life insurance journey.

Without specifying who you'd like to receive the payout from your policy, there's a chance the money might not find its way to your family. When you fill out your trust forms, you create a fast lane for your loved ones to get the money from your cover.

The boring legal bits

No one likes to talk about legal jargon. But we just wanted to quickly summarise the main benefits of putting your cover in trust.

The main advantages of putting your policy into trust are bypassing probate (that long, drawn-out legal process that could delay the payout) which typically takes 9 months on average, and mitigating inheritance tax. Now, let's dig into why you might want to consider putting your critical illness policy into a trust.

Imagine this – you're no longer here, and instead of grieving, your loved ones are buried under paperwork and having to deal with a complex probate process. This is not the ideal situation to put your loved ones in.

Peace of mind

Let’s put all the legal jargon aside for a moment. The true magic of placing your life insurance policy into trust is the peace of mind it can bring.

Once your life insurance is sorted and your trust forms are filled out and filed away, you can kick back, and breathe easy knowing that, if life takes a sudden turn, your loved ones have a financial safety net to fall back on. You can’t put a price on peace of mind like that.

Trusts and critical illness cover: A match made in heaven?

If you were to become critically ill, financial stress is the last thing you’d want for yourself or your loved ones.

By placing your policy into trust, you can ensure that the payout goes to the right people, when they need it, with minimal fuss and, potentially, lower tax implications.

The answer you’ve all been waiting for

Now you know more about trust forms and critical illness cover, back to the million-dollar question: Do you need to put your critical illness policy in trust?

Well, it all comes down to your circumstances, your wishes, and what you want to happen to the money, if the unthinkable were to happen. But we always recommend putting any life insurance policy into trust. 

If the idea of your loved ones receiving the payout quickly, and with fewer tax implications sounds good, then yes, putting your life insurance into trust is the smart move.



Here to help!

At Busy Bee Life Insurance, we always recommend putting your life insurance policy into trust. But at the end of the day, it’s totally your call.

If you decide to go ahead with putting your policy in trust, we have our very own dedicated trust team, here to help you with all things trusts.

Plus, there’s no time limit on getting your forms sorted, so our team is on hand to talk you through the forms whenever you need. There is no such thing as a silly question and you can spend as much time as you need discussing the details of, and changing your forms.

After everything is finalised with your policy and your forms, our aftercare doesn’t stop there. If you need any guidance or help with anything related to your policy in the future then we’re here to help.