LIFE INSURANCE.

Hawera Star, Volume XLV, 3 September 1925, Page 3

LIFE INSURANCE.

POLICIES PROTECTED

BILL BEFORE THE HOUSE

A life insurance policy taken out under bona fide circumstances is specially protected by the law in case of bankruptcy, but" the Government has discovered that th© statute needs strengthening, and an amendment of the Life Insurance Act has .been introduced, in charge of Sir Heaton Rhodes. Clause' 3 of the Bill arises out of a recent decision of the Court of Appeal in th© National Bank v. the Official Assignee in the estate of Claridge. In that case, the' policy-holder had' transferred his policy to the bank as security for a loan, and it was held by the court that in those circumstances’ he ceased to be the policy-holder witliiii the meaning of Section 65 of the Life Insurance Act.

. It follows from this decision that a policy-holder who so transfers or assigns his policy as security loses the benefit sought to he conferred on him by Section 65 in the event of liis bankruptcy. The Bill remedies this defect,’ and at the same time extends the protection to interests in the policy that may be held by certain near relatives. Another clause amends the obviously imperfect provisions of Section 66 of the Life Insurance Act, 1908, which contain an' exhaustive' list of classes of protected policies. The Bill repeals the clause, and substitutes a general .protection of all life, and accident policies, with the exception of certain classes of policies that could readily be used in fraud of creditors.

Speaking generally, a policy is not within the protection afforded l>y the Act (1) if it is certainly payable at the end of a shorter term than seven years, (2) if it has been purchased by means of a single premium, (3) if it has been purchased by premiums payable during a- term less than the continuance of the policy or less than seven years, with this exception—that every policy is protected that had actually been in force for at least seven years.

The Bill will empower an insurance company to transfer a policy of limited value on the death of the policy-holder (not being the' person insured) to any person who satisfactorily establishes his right to receive the policy, without requiring probate or letters of administration.