In a lot of modern phones, and particularly iPhones, the encryption key is stored in the TPM. The TPM itself handles the encryption and decryption of data. If someone manages to get read access to the system memory, the most they're getting is whatever cleartext data is stored in memory for cache or process memory.

Citing my Claims:

I'm not going to bore myself or anyone else with whitepapers and PDFs, but Apple themselves summarize how T2 (TPM) works with disk encryption on Mac devices. The iPhone has the same chip and an even stricter threat model. In M-series Apple devices, they rolled its functionality into the SoC.