How to set up a Life Insurance Trust in India?

As parents, you would have protected your children. For example, you may purchase insurance so that in case something happens to you while they are young, there will at least be cash to provide for their needs. If you have taken insurance, chances are, you may think that you have done enough in providing security to your loved ones by nominating them as your beneficiaries in your insurance policies. Think again.

Death benefits on life and investment policies that pay out to beneficiaries that are still minors are not usually held in trust for them. Often, these benefits are paid to the guardian.

The typical risks of this are:
  • The guardian could make poor financial decisions
  • Funds are not used exclusively in the interest of the minor beneficiary
  • Funds are invested together with the guardian’s personal funds and lose their identity, thereby becoming exposed to the guardian’s creditors.

An essential part of wise estate planning is deciding not only who our heirs will be, but also how, when, and why they will receive our legacy. Remember, though, that life insurance provides an immediate and often considerable payout of cash to your beneficiaries. And that can create many problems. Even adults with experience managing their finances may find that the sudden windfall of money from your life insurance policy is overwhelming.

Are your loved ones completely protected when you nominate them as beneficiaries in your insurance policies? Is that actually enough? You should consider:

  • If your spouse is the sole beneficiary to your insurance policy, what happens to the insurance proceeds upon your spouse’s passing?
  • If your young children are the beneficiaries, who should claim the insurance proceeds for them in the event both you and your spouse are unable to?
  • Are your beneficiaries mature enough to handle large sums of money?
  • Is there someone competent enough to assist the beneficiaries?

You can prevent these problems when you create a Insurance Trust with NexGen Estate Planning Solutions.


Do you know that trust is an extremely effective Estate Planning tool to protect your assets and to pass wealth to your heirs efficiently whilst maintaining privacy? You can continue to have control on how the insurance proceeds are distributed even when you are no longer around.

There are Two major advantages of Life Insurance Trust
  • It will help you protect the cash value of your life insurance policy from creditors.
  • It will allow you to control, when, how, and why your beneficiaries receive the proceeds of your policy.
What's required to set up a Life Insurance Trust?
The process will begin when you sit down with a NexGen Estate Planner to design your Life Insurance Trust. You will:
  1. Name your beneficiaries,
  2. Name your Trustees, and
  3. Lay out the circumstances you'll want your beneficiaries to receive money from the Trust.
What conditions can we establish for policy distributions after our deaths?

It's really up to you. You can, for instance, have the policy's proceeds paid out immediately to one or all of your beneficiaries. Or you can specify that your beneficiaries receive monthly or annual distributions. You may even dictate that beneficiaries receive money when they attain certain milestones. For example, you can provide for a large distribution when a beneficiary graduates from college, buys a first home, marries, or has a child. You can also build in flexibility, so that your Trustee has the discretion to provide distributions when your beneficiary needs it for a special purpose, such as starting a new business, or even a once-in-a-lifetime investment opportunity.

The point to remember is this: You have the opportunity to carefully control how, when, and why your beneficiaries receive the proceeds of your life insurance policy. That gives you the power to ensure that your policy is used in the best possible way on behalf of your loved ones.


With Life Insurance Trust, your beneficiaries are completely protected when you execute a trust deed stating your instructions and assign your insurance policy(s) to the trust by way of assignment. You can appoint a professional trustee such as NexGen Estate Planners to act a Co-Trustee to the trust.

Life Insurance Trust

Trustee, will assure you that your insurance proceeds are:

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