What is a key advantage of setting up a life policy written under trust?

Setting up a life policy written under trust has the significant advantage of avoiding probate. When a policy is held in trust, the death benefits can be paid directly to the beneficiaries named in the trust, bypassing the often lengthy and costly probate process that occurs when assets are transferred through a will. This means that beneficiaries receive the funds more quickly and with a greater degree of privacy, as the trust does not go through public probate proceedings.

Additionally, trusts can provide clearer instructions on how the proceeds should be distributed, which can be beneficial in ensuring that the policy benefits are used in accordance with the policyholder's wishes. This setup not only facilitates faster access to funds for the beneficiaries but can also help in managing the estate in a more organized manner.

The other options presented do not accurately reflect the primary benefits associated with holding a life insurance policy in trust. For instance, a life policy written under trust does not inherently increase its face value or provide tax deductions for premiums paid. Furthermore, it does not limit coverage to the trust period; instead, the insurance policy remains active as long as the premiums are paid, regardless of the trust's status.