What is a master trust?

When you take out a death in service insurance policy (also known as group life insurance), you will need to ensure a trust is in place to manage your scheme, to comply with legislation.

You may wish to join a master trust, which is a HMRC registered scheme set up and run by a third party to manage and administer death in service insurance schemes.

A master trust can help avoid the hassle of setting up and managing your own scheme.


How does a master trust work?

When an employer selects a master trust, all insured employees become scheme members. The professional trustees of the master trust will hold the policy and will be responsible for identifying any beneficiaries who may receive the pay out should a claim be made.

In the event of the death of a member, you must submit the required information to the master trust scheme

A key benefit of setting up your own stand-alone trust is being able to tailor it to meet your bespoke company needs. A corporate trust moves with your company should you change death in service insurance providers, whereas you cannot take a master trust with you. This is something you may wish to think about when making the decision on the kind of trust to set up for your business.

Most of the providers on our panel will have master trusts set up that you can use for your death in service insurance scheme. We will make it clear during the quote process which companies have this option available for you.

If you choose to use a company that does not have a master trust, it will be your responsibility to register your scheme with HMRC and set up your own business trust before cover can commence.

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Advantages of a master trust

  • Setting up your own scheme can be very time consuming as you will be required to do everything yourself, including registering the scheme with HMRC. With a master trust, this is all taken care of for you.
  • By joining a master trust, you can reduce administration by avoiding the hassle of setting up and administering your own scheme.
  • There is usually no additional cost for this service.
  • As a discretionary trust, it allows the benefits to be paid out speedily, without waiting for probate and with no inheritance tax charge.
  • The death in service insurance provider will assist with the trustees to deal with any disputes on your behalf.


Advantages of setting up your own trust

  • A corporate trust can be tailored to your company needs.
  • You can take the trust with you should you change death in service insurance provider.
  • Maintaining the same trust will reduce administration if you are moving providers.
  • You retain more control of the claims process.


If you’re ready to compare quotes for death in service insurance, you can do so here. Or if you'd like more detailed information about how the process works, visit our guide on how to buy death in service.

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