It is called an ILIT (“i” for irrevocable) and must be set up properly so that the insured has no shreds of ownership of the policy. Creation of an ILIT is best left to a lawyer who has experience with such trusts. An ILIT might make sense for those who live in a state with a low estate tax exemption and own a policy with a substantial payout that would put the estate over the exemption threshold. For the rest of us, not so much
See, for example, this article: