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					   POLICIES WITH NO VALUE AT THE DATE OF THE BANKRUPTCY
                           ORDER



The RTLU Group has agreed a standard procedure for dealing with policies which
have no surrender value at the time of the bankruptcy order but the proceeds of which
(if a claim is made) vest in the estate. This includes Term/ Whole Life assurance
policies, endowment policies which have not yet accrued a surrender value and
Critical Illness policies.

These policies lapse without value if the payments cease but if payments continue and
a claim is made the full amount of the claim is payable to the bankruptcy estate as a
vesting asset.

The RTLU Group consider it is important to ensure debtors are fully aware of the
implications if they continue to pay the premiums for policies which were in force at
the date of the bankruptcy order. Pro-forma letters explaining this and providing the
alternatives available for dealing with policies have been drafted (copies below).

The options available to the debtor are:-

      Cease payments – the policy will lapse with no value.
      Purchase the trustee’s interest in the policy for a consideration equivalent to 12
       months premiums.
      Continue payments

The following procedure has been agreed:-

      For each policy held by an individual debtor the local office dealing with the
       bankruptcy should write to the Insurance/Assurance company in the normal
       way to obtain confirmation of the type and value (if any) of the policy.
      Where the policy is a “no value” policy the local office should write to the
       debtor using the appropriate pro-forma letter and asking them to decide how
       they wish to proceed.
      Where the debtor wishes to “buy out” the trustee’s interest or continue
       payments the case should be sent to the RTLU to deal with the “sale” or
       monitor for any claim.
      The status of the case at transfer will depend upon the action to be taken a
       “sale” policy would normally be transferred as an open case, “continuing
       payment” policies would normally be transferred as a protracted realisation
       asset at the time the case is closed although this may depend upon what else is
       in the case.
      Where the debtor indicates he is to cease payments no further action needs to
       be taken (it is up to the local office to decide if they need to check whether
       payments have ceased and the policy lapsed without value).
      Where a debtor does not respond to the OR’s enquiry a check should be made
       by the local office to establish if payments to the policy are continuing, if they
       are the case should go to the RTLU as a “payment” case (again this will
       normally be a protracted realisation matter).
Where the RTLU team effect a “sale” of a policy it is important that the
Insurance/Assurance company is informed that the OR/trustee has no further interest
in the policy and any future moneys due under the terms of the policy should be paid
directly to the beneficiary to the policy.

Where the debtor is continuing to make payments to the policy the RTLU will
confirm the trustee’s interest to the Insurance/Assurance company providing contact
details in the event of a claim.


RTLU Group
               [Enter Recipient's Name & Address]


               ENDOWMENT POLICY
               LETTER                                                        Tel: 01642 617720
                                                                             Fax: 01642 628819
                                                                             e-mail: [enter name]@insolvency.gsi.gov.uk

                                                                             DX address :
                                                                             DX exchange:
Direct Line:
   Our Ref:    [Enter Reference]
  Your Ref:    [Enter External Reference]
      Date:    04 October 2007

               Dear [Salutation]

               [Enter the Subject here]

               I refer to the Bankruptcy Order made against you on [Enter date here].

               During the course of my enquiries into your affairs in my role as Trustee in
               Bankruptcy, it has been established that you hold an endowment policy with
               [enter insurance company] that has yet to acquire a surrender value.

               Section 306(1) of the Insolvency Act 1986 provides that a bankrupt’s estate vests
               in the trustee in bankruptcy and such a contract of insurance is an asset that vests
               in a bankruptcy estate. As a result, if the premiums on this policy are maintained
               and a surrender value is created, the proceeds from the surrender or maturity of
               the policy will be payable to the bankruptcy estate, even if the event leading to
               payment occurs after discharge from bankruptcy has been granted.

               As you should have been made aware, the options open to you in connection with
               this policy are that you either cease payments of the premiums (whereby the
               policy will lapse) and effect a new policy, or you may make an offer equivalent to
               12 months of premiums to the Official Receiver in order that he may then take
               steps to assign the policy back to you.
I would be obliged if you would let me have confirmation of your intentions in
this matter at your earliest convenience, or should you have any further queries,
please contact me at the above address.




Yours faithfully/sincerely




[Enter name here]
               [Enter Recipient's Name & Address]


               TERM ASSURANCE
               LETTER
                                                                             Tel: 01642 617720
                                                                             Fax: 01642 628819
                                                                             e-mail: [enter name]@insolvency.gsi.gov.uk

                                                                             DX address :
                                                                             DX exchange:
Direct Line:
   Our Ref:    [Enter Reference]
  Your Ref:    [Enter External Reference]
      Date:    04 October 2007

               Dear [Salutation]

               [Enter the Subject here]

               I refer to the Bankruptcy Order made against you on [Enter date here].

               During the course of my enquiries into your affairs in my role as Trustee in
               Bankruptcy, it has been established that you hold a term assurance policy with
               [enter insurance company].

               Section 306(1) of the Insolvency Act 1986 provides that a bankrupt’s estate vests
               in the trustee in bankruptcy and such a contract of insurance is an asset that vests
               in a bankruptcy estate. As a result, if the premiums on this policy are maintained
               and the life assured dies within the term of the policy, the proceeds will be
               payable to the bankruptcy estate, even if the event leading to payment occurs
               after discharge from bankruptcy has been granted.

               As you should have been made aware, the options open to you in connection with
               this policy are that you either cease payments of the premiums (whereby the
               policy will lapse) and effect a new policy, or you may make an offer equivalent to
               12 months of premiums to the Official Receiver in order that he may then take
               steps to assign the policy back to you.
I would be obliged if you would let me have confirmation of your intentions in
this matter at your earliest convenience, or should you have any further queries,
please contact me at the above address.




Yours faithfully/sincerely




[Enter name here]
               [Enter Recipient's Name & Address]


               CRITICAL ILLNESS
                                                                             Tel: 01642 617720
               POLICY LETTER                                                 Fax: 01642 628819
                                                                             e-mail: [enter name]@insolvency.gsi.gov.uk

                                                                             DX address :
                                                                             DX exchange:
Direct Line:
   Our Ref:    [Enter Reference]
  Your Ref:    [Enter External Reference]
      Date:    04 October 2007

               Dear [Salutation]

               [Enter the Subject here]

               I refer to the Bankruptcy Order made against you on [Enter date here].

               During the course of my enquiries into your affairs in my role as Trustee in
               Bankruptcy, it has been established that you hold a critical illness insurance
               policy with [enter insurance company].

               Section 306(1) of the Insolvency Act 1986 provides that a bankrupt’s estate vests
               in the trustee in bankruptcy and such a contract of insurance is an asset that vests
               in a bankruptcy estate. As a result, if the premiums on this policy are maintained
               and the conditions for payment under the policy are fulfilled (notwithstanding
               that the condition is personal to you), the Official Receiver or your trustee in
               bankruptcy is entitled to receive the proceeds as and when they become payable,
               even if the event leading to payment occurs after discharge from bankruptcy has
               been granted.

               As you should have been made aware, the options open to you in connection with
               this policy are that you either cease payments of the premiums (whereby the
               policy will lapse) and effect a new policy, or you may make an offer equivalent to
               12 months of premiums to the Official Receiver in order that he may then take
               steps to assign the policy back to you.
I would be obliged if you would let me have confirmation of your intentions in
this matter at your earliest convenience, or should you have any further queries,
please contact me at the above address.




Yours faithfully/sincerely




[Enter name here]

				
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