Endowment Policy on Death: How to Claim the Proceeds

What is an endowment policy?

An endowment policy is a life insurance contract that combines a savings element with life cover. It pays a lump sum either:

• On the maturity date (e.g., after 25 years), or
• On the death of the life assured before maturity — whichever comes first

The most common types are:

• With-profits endowments: Invested in a with-profits fund; bonuses are added annually and a terminal bonus may be added on maturity or death
• Unit-linked endowments: Invested in unit trusts or similar; value fluctuates with the market
• Low-cost endowments: A combination of with-profits and term life insurance

In trust or not? The critical question

The most important question is whether the endowment was written in trust.

Not in trust: The proceeds are paid to the estate of the deceased. They form part of the taxable estate for IHT and must go through probate before being distributed.

Written in trust: The proceeds are paid directly to the trust beneficiaries — typically the spouse or named children. They bypass probate and are outside the estate for IHT. This is the more common arrangement for mortgage-linked endowments.

Check the original policy documents for a "deed of trust" or "assignment in trust" clause. If the policy was linked to a mortgage and sold by a bank, it was almost certainly written in trust to protect the lender.

Making the claim

To claim the proceeds of an endowment policy on death, contact the insurer (the life assurance company) and provide:

• The original policy document (or the policy number if the document is lost)
• A death certificate
• Grant of probate (for policies in the estate) — the insurer may require this before releasing funds
• For trust policies: evidence of who the beneficiaries are
• Completed claim forms provided by the insurer

The insurer will verify the claim and, once approved, pay the proceeds to the estate or directly to the trust beneficiaries.

With-profits policies: bonuses and the claim value

For with-profits endowments, the claim value includes:

• The basic sum assured (the original guaranteed amount)
• Reversionary bonuses added annually (accrued over the life of the policy)
• A terminal bonus (added at the time of claim — can be substantial)

Ask the insurer for a current valuation at the date of death. The insurer will provide a breakdown of these components.

Tax on endowment proceeds

For UK qualifying policies (which most endowments are), the proceeds are generally free of income tax and CGT when received. This is because the premiums were paid from post-tax income and the policy qualifies as a "qualifying policy" under ICTA 1988.

However, the proceeds form part of the estate for IHT purposes if the policy was not written in trust. For the IHT context, see our inheritance tax UK 2026–27 guide.

Lost policy document

If the original policy document cannot be found, contact the insurer using any information available — the insurer's name, the policy number (from old correspondence or a bank statement), or the insurer's legacy records. Insurers can usually locate policies using the deceased's name, date of birth, and address.

Some endowment policies were sold by companies that have since been taken over or rebranded. Check who acquired the original insurer if the company no longer appears to exist.

For the general estate administration process, see the estate administration checklist, complete UK probate guide 2026, and applying for probate guide. For related financial products, see our annuity on death guide and frozen deferred pension guide. For collecting estate assets, see our collecting assets after probate guide. For the IHT400, see our IHT400 guide. For executor first steps, see our executor first steps guide. For the estate administration checklist, see our estate administration checklist. Farra can help — get started here.