Is the insurance payout of life policy (if death/disability/illness) protected from creditor? If a bankrupt receives half of property as an estate when his parent pass away, will he be forced to sell his 50% share to pay creditor?

Answer :

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    answered on 28/08/2014

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    On the assumption that the insurance policy names a beneficiary, then the proceeds will belong to the beneficiary, and it will be protected from the insured's creditors. In your query, the bankrupt will have possession of the half. The OA will decide how to deal with the 50% share and it may not compel the bankrupt to sell the 50% share. Further, it is difficult, if not impossible, to sell a 50% share in any property as a matter of practical enforcement.

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