life insurance

mellersh

can anyone help is it true that when made bankrupt by HMRC that when you die they will take you life insurance .Also what happens if you carry on working after being made bankrupt .We are both in our sixties and all this worry is making us ill .Thanks

JCS1

mellersh wrote: »

can anyone help is it true that when made bankrupt by HMRC that when you die they will take you life insurance .Also what happens if you carry on working after being made bankrupt .We are both in our sixties and all this worry is making us ill .Thanks

Hi,

As a life assurance policy is an asset that the OR has to deal with this. They will check with the policy provider, and if there is a surrender value than they will cash in the policy and put the money into your BR estate.

If there is no surrender value, then the options are:
Let the policy lapse and take out a new one (ideally after discharge)

• Keep paying the preuims and when the inveitable happens, even many years after discharge, the money goes to the OR
• Buy the OR's beneficial interest in the policy for a one off payment of £50

HTH

Frank_Cannon

Does this also apply with term assurance, where you only win the jackpot if you die within, say, 20 years, and there is no payout if you survive beyond then?

dojoman

With term insurance (we have 2 joint ones) you are, as already said able to buy them back from the OR at a cost of £50 per policy, however if you were to die whilst still BR, the proceeds would still go the OR. But once you are discharged then the OR will not have a claim on them. If you don`t buy them back then the OR has a claim on them whenever you were to pass away.

Frank_Cannon

When do they offer you the chance to purchase the BI back?
I've been BR for nearly a month and had my OR interview two weeks ago. I'll be having a heart bypass within the next month, and there is a small possibility of serious death.
Is it likely that the OR will be hanging on to the BI with his fingers crossed?

dojoman

It was over 2 months before we were given the offer, it depends on how busy your OR is.

debtinfo

Also just to point out that even if you buy the policy back, if you die during the bankruptcy and the money pays out to your estate the OR will take it as it will be classed as money received before discharge to your estate

MicheH

I can't offer any advice i'm afraid but wanted to let you know I feel what you're going through with regards to life insurance. We surrendered our life policies at the beginning of BR. We didn't buy back the BI as we didn't have £100 to do it (both of us BR) so now we're holding our fingers tightly crossed in the hope we can get through BR without something terrible happening (2 very young children) As soon as we're discharged we'll be able to relax somewhat and apply for new policies.

Although I understand the reasoning about the OR having access to any payout upon death it really is scary to have to do without a policy or if you continue with the policy, knowing that it would all go to OR. I just don't agree with it, yes any masses of thousands should go to the OR but what about a family left without anything should one or both 'go' A small cushion to pay the rent and bills for a couple of months, funeral costs covered is surely not a lot to ask for is it? Maybe it is.

debtinfo

I know its not much, but the funeral costs are released from the bankrupts estate

debtinfo

In fact this applies not just to life policies, If the bankrupt dies at any point during the bankruptcy and there is money in the estate then the funeral and testamentary costs can be paid by the OR

MicheH

really Debtinfo? I wish i'd spoken to you earlier. I've been so worried about funeral costs. Thank you