Definition - What does Trustee mean?
A trustee is a third party who is legally responsible for managing a trust and distributing its assets on behalf of a grantor. Trustees are often banks. In the context of insurance, many people use trustees to manage life insurance trusts. In a life insurance trust, a life insurance policy is the primary asset of the trust.
Insuranceopedia explains Trustee
The reason why many people set up life insurance trusts is because they are often exempt from the estate tax. So, a death benefit from a life insurance policy in a trust can provide a higher amount to beneficiaries then it would outside of a trust. By using the services of a trustee, a life insurance policyholder can actually pass on more money to his or her beneficiaries. However, to be exempt from the estate tax, the life insurance trust must often be set up three years in advance of the policyholder's death.