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Second hand polices

Endowment life insurance policies build up a surrender value and have a maturity date when payment will be made by the life office. In some cases the person who originally purchased an endowment policy may find they have no further need of the policy and want to cash it in. These policies can represent a good financial investment in they are with profits and issued by reputable well standing life offices with a good track record on bonuses.

There is a legitimate second market in these policies which may offer the seller a larger return that they might get as a surrender value.

The seller hands over the policy to the buyer for the agreed amount and does this under an executed deed. The buyer serves notice on the life office of the assignment and from then on continues to pay the remaining premium due, as and when it is due. The buyer receives the monies on the policy at maturity date, and could if the life insured died, receive the monies at an earlier date.  

Bankruptcy

The Insolvency Act 1986 allows for trustee to be appointed by the courts in the case of a bankrupt. The trustee will take possession of the bankrupt’s possessions, to the extent they are allowed, and sell these in order to gain monies which will then be distributed among the creditors.   Bankruptcy arises when the debtor can not or will not settle his/her debts. The insolvency act allows for a process which provides a way forward and after a period of time the bankrupt can then usually resume their life debt free.

When the owner of the life policy becomes bankrupt they can no longer deal with their own policy and the life office must deal with the trustee in bankruptcy. The trustee will usually notify the life office of their involvement and the life office will note their records accordingly.

The trustee can surrender the life policy in order to obtain cash to go towards settlement of the creditors. To do that the trustee will provide the life office with the policy documents, the bankruptcy order and either the order for summary administration or the certificate of appointment as trustee. The trustee can either sell the policy for immediate cash or leave to policy to run for a period of time to protect the creditors in case the bankruptcy dies.

Under the Enterprise Act 2002 for bankruptcies on or after 1at April 2004 there will normally be a discharge after one year, previously the period had been three years. For bankruptcies before 1 st April 2004 an automatic release date (assuming they fit the correct category) was set at 1st April 2005. The act allows for an extension of the period for serial bankrupts and those who act irresponsibly.