s.29How benefits of insurance policies should inure
29
Section 29Part 5 — MISCELLANEOUS

How benefits of insurance policies should inure

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Subject to subsection (2), all proceeds paid or payable to a policy holder or a beneficiary under a contract of insurance in respect of long term business issued by any insurer shall inure exclusively for the benefit of the policy holder or the beneficiary in accordance with the terms of the contract of insurance and —
shall be protected from the claim of any creditor in bankruptcy, insolvency, administration or similar proceedings relating to any person, whether that person is the policy holder or a beneficiary or whether the claim arose before or after payment under the contract of insurance, unless the contract of insurance was effected for the benefit of the creditor; and
shall not be subject to or be otherwise available to meet the claim of any creditor of a person, whether that person is the policy holder or a beneficiary or whether the claim arose before or after payment under the contract of insurance, unless the contract of insurance was effected for the benefit of the creditor.
Where premiums are paid by any person to an insurer with intent to defraud a creditor, nothing contained in the Fraudulent Dispositions Law (1996 Revision) shall operate to set aside a payment made under this section and any creditor of the person shall be entitled only to receive out of the proceeds a sum equal to the premiums so paid, together with such interest as the court may order, for the period between payment of the premium and the date of the payment.
For the purposes of the application of the Fraudulent Dispositions Law (1996 Revision) to subsection (2) —
the premium or premiums paid under subsection (2) shall be deemed to be dispositions at undervalue;
the six-year limitation period in section 4(3) of that Law shall apply to the claim of the creditor but the enforcement of any judgment resulting from the claim shall be permitted against the proceeds outside of any limitation period; and
at no time shall the creditor have any right of action or claim against the insurer.
This section applies notwithstanding that —
the policy holder reserves a power to nominate or remove one or more other beneficiaries; or
the policy holder or the estate of the policy holder is an actual or contingent beneficiary under the contract of insurance.
For the purposes of subsection (2), creditor means creditor as defined in section 2 of the Fraudulent Dispositions Law (1996 Revision).

Cross References