Life insurance payout!

lavvy

Can anyone tell me if when a life insurance policy is paid out on the death of a spouse, as it is payable directly to the widow is the money meant to be for clearing the husbands debts or to support the family and children through the coming months/years. I am asking this on behalf of a close family friend who has lost her husband and is left with 3 children under 6. Thank you.

dunstonh

Can anyone tell me if when a life insurance policy is paid out on the death of a spouse, as it is payable directly to the widow is the money meant to be for clearing the husbands debts or to support the family and children through the coming months/years.

If it is not in trust or there is not another policy owner, it will be paid to the estate of the policy owner. The debts will be settled from the estate.

If the life assurance is in trust it will be paid to the beneficiaries to do as they wish.

if there is another policyowner, then it will be paid to the other policyowner for them to do as they wish.

lavvy

From what I understand the policy was taken out by the wife and was being paid for by her from her bank account.

maddogb

I think you may be asking the wrong question here and whilst I recently became a widower 18mths ago my situation was different as my wife had very few debts so hopefully someone can offer better advice.
It may be more relevant to find out which debts can be pursued from the estate, in this case it may be that the husband had debts that were entirely his responsibility and cannot be taken from his wife or it may be the case as was with my wife some of the smaller debts were simply cancelled without my even asking for them to be eg
1 my wifes Next account had about £100 pound owing, when I phone up to notify them without asking the simply wrote the debt off
2 my wifes account with EE insisted on every penny being paid, as it was sub £100 I didn't bother even asking at the time but they were fairly "businesslike" over the matter.

magpiecottage

lavvy wrote: »

From what I understand the policy was taken out by the wife and was being paid for by her from her bank account.

That would be what is known as "life of another" policy - i.e. the person who owns the policy is not the person whose life is covered.

If that is the case, the proceeds belong to the widow absolutely and creditors of the deceased have no claim on it unless it is being used to secure a joint debt they held.