Yes you could buy the policy in a trust. The proceeds would be out of the person’s estate and no estate taxes would be due nor income tax owed when the proceeds distributed to the beneficiaries.
The sticky part would be the money going into the trust to pay the premiums. Let’s say the premiums were $200,000 per year and there are two beneficiaries. The money going to the trust for the premiums is considered a gift. You can gift $14,000 per person per year. With two beneficiaries $28,000 would be free of gift tax. The remaining $172,000 would be subject to gift tax. The person making the excess $172,000 gift could reduce the their lifetime $5.49 million estate and gift tax exemption amount and pay no gift tax in the year of the gift or pay up to 39% gift tax on the $172,000. Once you use up the $5.49 million you would owe gift tax or estate tax at death. If you use the entire $5.49 million up during your lifetime your estate would owe estate tax on your remaining estate value at death. The insurance proceeds if set up properly in a insurance trust wouldn’t be subject to estate taxes.
Hope it makes some sense. Basically in 2017 the IRS allows you to have up to $5.49 million in assets with no estate taxes owed and you can gift $14,000 to as many individuals as you want each year without reducing that $5.49 lifetime exemption amount.