Life assurance

MTDancer

Husband is bankrupt. Due to be discarged in September. We have a joint life policy. Receiver offered to sell it to us for £50
I am puzzled about the wording which states; may lapse.

● If you do not proceed with the purchase and premiums continue to be paid, I will be entitled to receive the full proceeds of any claim or surrender value on the policy, even if this happens after you have been discharged from bankruptcy.

may lapse..

● If you do proceed with the purchase and premiums continue to be paid, I will be

entitled to make a claim on the monetary proceeds of any claim if, and only if, such

monies are received prior to your discharge from bankruptcy.

Can she really have a claim for the full amount (which is 4 times more than the bankrupt amount)?

Minkym00

Short answer is yes. If your husband doesn’t buy it back it remains an asset in his bankruptcy, and assets in bankruptcy remain so forever unless, or until, they are realised or disclaimed. 

If there was a pay out then the OR would claim the funds, take off 15% of the value of the funds, take off their fees, pay off the creditors and then give any balance remaining back to the bankrupt’s estate. 

Which is why, for £50, it is very much in your husband’s interest to buy it back. He could just cancel it and get new cover, but only do that after he’s discharged. 

MTDancer

Thanks for this clarification. Beans on toast it is for a few weeks then. Will buy it back