BR - OR interest in life policy

[andymac]

Hi All:

The OR has written to me to say that whilst my life assurance policies have no surrender value, "they are still considered to be an asset that vests in the Official Receiver as a result of Bankruptcy. This means that in the event of your death any payment would be made to your bankruptcy estate if the policies do not have any nominated beneficiaries".

The first sentence seems to suggest that the money is theirs if I die during BR, but the second seems to suggest that if I have nominated Beneficiaries, then the money goes to them, a bit confusing.

Does anyone know the facts on this point?

Many thanks

[queenie]

andymac
If you want to retain the policy, you can 'buy if back' off the OR for the cost of 12 months premiums.

Queenie

[andymac]

Hi Queenie,

Thanks.

It does offer this in the letter, BUT it says it buys back the interest in the policy AFTER discharge, not during.

[Adam Davies]

Hi
I can now see why they want the twelve months upfront,they pay the premium and after you are discharged the benefits return to you.
If you surrender the policy they must allow for the premium cost in your expenditure otherwise the policy would lapse.
Interesting

Andy Davie
IVA.co.uk Spokesperson

About me:
http://www.iva.co.uk/andy_davie_profile.asp

IVA Helpline: 0800 197 4838
http://www.iva.co.uk/iva_helpline.asp

[wen]

What happens if you can't afford 12 months payments upfront?

In a similar situation and I would have to cough up an extra £600 to do this. (It's a joint policy) with hubby, also to become BR.

[UPINSMOKE]

I am interested in this as well. Does this apply to Endowment Life Policies or am I being optimistic. I have an endowment that I have payed for the past 10 years only 3 years to go. But is in joint name Me and my wife who has left me over a year ago. Seems that they are saying that it could be surrendered and half goes to OR and the other half goes to my wife, although its be me who has paid all the premiums.

Mick

( Now that food has replaced sex in my life, I can't even get into my own pants.)

[andymac]

I think there is some confusion here.

If I die before discharge, the payout goes to the BR estate unless there is a named beneficiary in the insurance; I am double checking if this is so.

If once discharged I die, the monies still go to the BR estate, unless I pay £ 50 per policy (£ 100 total) which will have the OR ensure that any monies paid out following discharge go to my own estate or beneficiary.

[queenie]

Upinsmoke
I'm afraid this is only the case for life policies and not endowments. Endowments can be cashed in before death and so there is some asset available for creditors immediately.
andymac
My understanding is that once you have bought back the policy from the OR they let the assurance company know they have no further interest in the policy and all rights revert back to the beneficiary.
The beneficiary would then benefit on your death whether you are discharged or not.

Queenie

[andymac]

I have just clarified this with the OR.

The £ 50 per policy buys back your interest in the policy AFTER discharge, but the only way to guarantee a payment from a life policy during discharge is to take out a new policy and cancel the old one.

[wen]

To clarify my point:

On my life policy, if the OR says "Do you want to buy it back for 12 months premium?" and i say *NO*, I assume the OR will then have to allow the expense in my I&E to allow me to pay for it during my BR. Once it is discharged I assume I would then just lose the policy end of.

Would that be correct? I just know I cannot pay £600 to the OR to allow me to keep the policy after the BR. Anyway, the policy was to cover my mortgage, which i won't have anymore!

[andymac]

It might be that different OR's offer different options, but mine (Leicestershire) do not mention this "pay for 12 months" option. It is either cancel them, do nothing, or pay £ 50 per policy to gain the policy back AFTER discharge.

you need to wait for your letter from the OR on the subject I would suggest.

[queenie]

andymac

Check this link - it looks like they gave you duff information at the OR's office.
http://www.insolvency.gov.uk/DocumentLi ... Value1.doc

Queenie

[Adam Davies]

Hi
The part that I can't understand is that if you do not want to pay the years premiums upfront and stop paying the premiums then surely,if it is a simple life policy,the policy would lapse and be worthless to the OR in that it would not pay anything out if you died.
Or am I missing something ?

Andy Davie
IVA.co.uk Spokesperson

About me:
http://www.iva.co.uk/andy_davie_profile.asp

IVA Helpline: 0800 197 4838
http://www.iva.co.uk/iva_helpline.asp

[queenie]

No Andy, you are right.
They just want to make sure if anyone benefits creditors do. If no one benefits because the policy lapses then no one is better off than the creditors.
You can protect the policy by buying it back for one year's premiums, and in some cases this is a more economical way to have a policy as taking out a new one may result in higher premiums because of an increase in age for example.

Queenie

[Adam Davies]

Hi
Thanks for that Queenie,I was writing my post before you posted.
As I thought you have a choice,pay nothing and policy lapses,keep paying and buy the ORs interest out or keep paying and allow the OR an interest.
So andymac has a choice
regards

Andy Davie
IVA.co.uk Spokesperson

About me:
http://www.iva.co.uk/andy_davie_profile.asp

IVA Helpline: 0800 197 4838
http://www.iva.co.uk/iva_helpline.asp