Insurance policies
Debt advisers/trustees must obtain documentary evidence of all insurance policies held and establish whether there is any immediate realisation value. The onus is on the client to clarify the position. The surrender value of any life insurance policy must be established before a bankruptcy application. If the surrender value exceeds £1,000, the client is not eligible for bankruptcy through the MAP route.
Maintenance of insurance policies is acceptable if each policy is relevant and the cost is not excessive. Clients should be advised that if insurance policy premium costs are excessive, they may be asked to pay a higher contribution.
Note that advice on changing life insurance cover provision or disposing of an insurance policy falls within the boundary of regulated financial advice and so outside the remit of advice from debt advisers/trustees. If the client has queries about their life insurance policies, they should be referred to an appropriate adviser.