Life Insurance Trust Policy (Health Care) Law and Legal Definition

A life insurance trust is a type of life insurance policy in which an irrevocable, non-amendable trust company is named as the owner and beneficiary of one or more life insurance policies, and the policy proceeds are distributed as per the terms of the trust agreement.

In a life insurance trust, upon the death of an insured, the insurance proceeds will be distributed among the beneficiaries. Where a trust owns the insurance on the life of a married person, the proceeds will be distributed among the non-insured spouse and children who are the beneficiaries of the insurance trust. In case of survivorship insurance which becomes payable upon the death of both spouses the insurance proceeds will be distributed between the children who are the beneficiaries of the insurance trust.