Strictly speaking I believe the obligation to file a return arises if the aggregate transfer (ie trust fund plus chargeable transfers made in the seven years preceding the creation of the trust) is greater than 80% of the nil rate band.
The regulations are here:
You can usually treat term insurance as of negligible value if the life is in good health. If this is a whole life policy, you should also check whether the policy has a realisation or transfer value.
And yes, if the trustees have assets (the sum owed by the beneficiary), there is value in the trust and there could still be a charge. The trustees would need to part recover the loan to enable them to pay any tax.
Osborne Clarke LLP