Policyholders often perceive that buying insurance is enough to protect them from untoward incidents, illness, disabilities or death but they should also realise that insurance policy without insurance trust would cause much inconvenience in distributing their insurance monies to their beneficiaries once they depart from this world.
As life insurance monies benefit their beneficiaries, policyholders need to be aware of the importance of appointing a trustee.
They should also be aware of changes made in the new Financial Services Act 2013 (FSA) which came under immediate effect from July 1, 2013, whereby in this new act the policyholder cannot appoint himself as a trustee.
A trustee, is the legally appointed entity that manages the policyholder’s insurance monies once he or she has passed away. Similar to a will, an insurance trust will ensure smooth execution of the distribution of the insured monies to the beneficiaries.
By setting up an insurance trust, policyholders can decide how to distribute their money and ensure their beneficiaries not squander the money since they may not know how to manage such a large sum of money, he said.
Most importantly, they could rest assured that the trustee will distribute the monies to the beneficiaries in accordance with the trust deed, in which their insurance objectives are fulfilled.
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