Most people take out life insurance for one simple, good reason: peace of mind. It’s comforting to know that, if the worst were to happen, your family wouldn’t have to worry about the mortgage, the bills or keeping food on the table.

But this sensible protection is often misunderstood as a catch-all solution for ‘sorting everything out’. It isn’t. Life insurance provides the money, but a Will provides the legal instructions for what happens next. They’re two very different tools — and they work best when they work together, as part of your wider financial planning.

In this piece, we explain how each one fits in, where problems often arise, and what practical steps you can take to be sure your family really is protected.

Life insurance: a promise of financial support

At its core, life insurance is a straightforward product: you pay regular premiums so that, if you die while the policy is active, a lump sum is paid out to help the people you leave behind. This money is often intended to clear a mortgage, cover daily living costs or provide a cushion for your children’s future.

It’s one of the cornerstones of sensible financial planning. For many families, especially young ones with dependants and a mortgage, it’s simply non-negotiable.

But life insurance only solves part of the equation. Where that payout goes, who controls it, and whether it ends up in the right hands, all depend on two other things: how the policy is set up, and whether you have a valid Will.

Where does the payout actually go?

A common assumption is that life insurance money automatically lands directly in your partner’s bank account. Sometimes it does — but not always.

• If you’ve named a specific beneficiary on the policy, the insurer usually pays that person directly.
  
  
• If you’ve arranged for the policy to be held in trust, the payout goes straight to the trust’s named beneficiaries. This can help with inheritance tax planning and keeps the money outside your general estate.
  
  
• If you haven’t named a beneficiary or created a trust, the payout typically goes into your estate and is distributed according to your Will — or, if you have no Will, according to the law.
  
  

This is where problems can start. An outdated Will, or none at all, means that a carefully planned insurance payout can end up in the wrong hands, cause family disputes, or get tied up in a lengthy probate process at precisely the time your loved ones need it most.

A Will: the legal backbone of your plan

A Will does something life insurance cannot: it sets out clear legal instructions for everything you own, not just the insurance money. That includes your home, savings, investments, personal belongings — and any insurance payout that enters your estate.

Think of your Will as the anchor point for your entire financial plan. It ensures that all your efforts — from building up savings to paying premiums year after year — translate into the right practical outcome: your wealth reaching the people you care about, in the way you want, with the least possible hassle or conflict.

How things can go wrong: real examples

Example 1: No beneficiary, no Will
Mark, a single father of two, had a life insurance policy large enough to clear his mortgage and leave a nest egg for his children. But he hadn’t named a beneficiary, and he hadn’t updated his Will since before his divorce. When he died unexpectedly, the payout entered his estate, but intestacy rules meant that part went to his estranged ex-wife, and the rest was delayed while the court appointed guardians for the children’s share.
A named beneficiary and an up-to-date Will would have ensured the money went where he intended, immediately.

Example 2: Out-of-date Will
Lucy remarried but never updated her Will or her life insurance trust, which still named her brother as trustee. When she died, the payout went into a trust that didn’t match her new family circumstances, creating conflict between her new spouse and her brother about how the money should be used for the children. What she thought was a simple arrangement caused unnecessary stress.

Why both matter — and fit naturally together

Life insurance and a Will are not competing priorities — they’re two sides of the same coin. One provides financial security; the other gives clear legal direction for how that security is managed and passed on.

If you think about your financial planning as a whole — your mortgage, pension, savings, insurances — a Will is the piece that connects them all. Without it, you leave loose ends, ambiguity, and a risk that your efforts during life don’t translate into the protection you imagined for your family.

A note about trusts

Many people in the UK use trusts alongside life insurance to manage inheritance tax and make sure money goes straight to loved ones rather than through the estate. This can be extremely effective — but only if set up properly and alongside an up-to-date Will that deals with everything else.

A trust alone doesn’t cover your house, your bank accounts, your personal possessions or who should care for your children. That’s why even the best trust needs a Will to complete the plan.

What you should do now

If you already have life insurance, you’re halfway there — you’ve taken an important step many people overlook. To complete the picture:

• Check your policy documents: Who is named as the beneficiary? Is the policy written in trust? Does this still match your family situation today?
  
  
• Review your Will: Does it account for your current family, any new children, a new partner, or changed circumstances?
  
  
• Make a habit of revisiting both whenever there’s a big life event — a house move, marriage, divorce, birth of a child, or significant financial change.
  
  

The bottom line

Life insurance provides the financial means. A Will makes sure those means do what you intended, without confusion, delay or unintended outcomes. Together, they form a solid, joined-up plan that protects your loved ones properly — not just in theory, but in practice.