If you died with Life Insurance in place, and you own the policy as well as being the person insured normally the money would form part of your estate. This can become a problem if the total of your estate is higher than the current threshold for Inheritance Tax because anything over will be charged at 40%. Keeping the money out of your estate can become a large saving.
Putting a life insurance policy into trust is a way of moving the proceeds of the policy out of your estate, while making sure that the money is provided to the right people quickly. However placing a policy in trust is something you can’t change your mind about later on, so it’s important you think carefully about doing this. If you're considering doing this, you should speak to a financial adviser, or a solicitor to understand more about the benefits and the risks involved.
More information on trusts