Should I continue to pay life insurance premium?

macbabypam

Went BR with OH is September this year. We have been continuing to pay life insurance by monthly DD that was taken out before BR .

Do I understand correctly that if me or OH died before BR AD next year that the property would become an asset and the one left would be forced to sell and seized by OR ?

We are in negative equity now so house is not included in BR. Is it worth me cancelling life insurance until AD when we will have to try to get new policy and would the OR allow me to cancel it ?

Had another blow today with Yorkshire bank closing our account even though I informed them of the BR and they told me it was Ok to keep account as it was just a basic one opened just before we were BR.

It's been a crappy day ...

debt_doctor

macbabypam wrote: »

Went BR with OH is September this year. We have been continuing to pay life insurance by monthly DD that was taken out before BR .

Do I understand correctly that if me or OH died before BR AD next year that the property would become an asset and the one left would be forced to sell and seized by OR ?

We are in negative equity now so house is not included in BR. Is it worth me cancelling life insurance until AD when we will have to try to get new policy and would the OR allow me to cancel it ?

Had another blow today with Yorkshire bank closing our account even though I informed them of the BR and they told me it was Ok to keep account as it was just a basic one opened just before we were BR.

It's been a crappy day ...

Hi,..... not quite.
It depends upon what type of policy it is;

If it pays out on death only, with no surrender/ cash value, then you should either stop paying the premiums and let it lapse or pay the standard ORs fee for such a policy which is £50. If you don't do this then the OR will always get the proceeds, whenever in the future it pays out.

If it is an endowment policy then the value of it is added to the value of the property that may bring the property in to positive equity, and therefore an asset.

DD

TheGardener

Sorry to hear you have had such a crappy day - it must feel like you are being kicked while your down. DD is the expert on the Life Assurance question.

As for the bank account - Barclays should be your next call unless you have a credit union in your area (some Trade Unions or jobs have them too like the Police force) if its large enough to offer current accounts - even if it doesn't offer current account, you could still open a CU savings account. http://www.moneysavingexpert.com/banking/credit-unions

Barclays should open you a basic account but there is rarely any phone, mobile app or internet banking unless you slip though their net. I believe Secure Trust Bank will also let you have an account but they are not on the high St and charge £12.50 per month I think. They do offer online banking though.

macbabypam

thanks for the reply Debt Doctor. Does that mean even after we are discharged and say we had bought back the interest in the house, if we did not pay the £50 for the policy the OR could claim the pay out upon death even in say 10 years time.

It is a life policy payable on death. If we stopped paying the policy now, how easy would it be to take out another policy once we are discharged and would the OR have a claim on that one ?

Thanks in advance for the clarification

debt_doctor

macbabypam wrote: »

thanks for the reply Debt Doctor. Does that mean even after we are discharged and say we had bought back the interest in the house, if we did not pay the £50 for the policy the OR could claim the pay out upon death even in say 10 years time.

It is a life policy payable on death. If we stopped paying the policy now, how easy would it be to take out another policy once we are discharged and would the OR have a claim on that one ?

Thanks in advance for the clarification

Yes, your grasp on the situation is correct. The ORs staff have a duty to bring this to your attention - did they not do that? You need to buy the interest in the policy or let it lapse.
Once you are discharged there should be no problem in taking out a new policy, but time affects us all, and your current age may bring more expensive cover than your original policy, although for those under 45years in good health this would be almost irrelevant.

DD

debt_doctor

From the technical manual...........

31.5.128 Life assurance policies with no surrender value
Some life assurance policies have no realisable value and cannot be surrendered such as term life policies. If the premiums are not paid the policy will lapse (see paragraph 31.5.124). A life assurance policy without a surrender value vests in the official receiver as trustee. The official receiver should decide whether the policy continues to vest or whether to sell his/her interest in the policy to the bankrupt (see paragraph 31.5.129). Where the official receiver decides that the policy should continue to vest he/she should follow the advice in paragraphs 31.5.126 and 31.5.131.

31.5.129 Selling a life assurance policy to the bankrupt
Where the official receiver is satisfied that there is no foreseeable prospect of making a claim under the policy he/she should offer to sell his/her interest to the bankrupt. The Insolvency Service has adopted a standard fee of £50 to cover the administrative costs of any assignment. The official receiver should send form LTBPOL to the bankrupt which explains the position. The letter informs the bankrupt that if he/she does not purchase the trustee’s interest and continues to pay the premiums then any payment due from the life assurance policy will be an asset in the bankruptcy proceedings. Where the official receiver, as trustee, decides to sell his/her interest in a life assurance policy to the bankrupt any future premium payments should be allowed in his/her calculation for an income payment agreement or order. As a result the amount of these should be considered at the time the decision is made.

DD