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Can DGI surrender a bankrupt's existing insurance or takaful policy?

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asked on Feb 22, 2021 at 13:43
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edited on Apr 2, 2022 at 03:41
 
I would like to know if a person has been declared bankrupt, can Director General of Insolvency (DGI) surrender his/her existing insurance or takaful savings policy in order to withdraw the cash value for the creditors?

Really appreciate your insights!

Thanks in advance.
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answered on Feb 22, 2021 at 14:15
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edited Apr 2, 2022 at 03:44
 
@ Louis

From what I know - only the insured can surrender the policy and no one else. Never heard the Director General of Insolvency (DGI) has such power. Plus insurance policy is not an assets. As it goes, insurance to safeguard against bad stuff happening. So if the DGI surrender it, anything bad happen to the insured, who will pay the cost to the relative? The DGI will pay?.. I don't think so.
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answered on Feb 22, 2021 at 14:36
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edited Apr 2, 2022 at 03:48
 
@Louis Goh,

In bankruptcy laws, Insurances Policies are ASSETS which can be liquidated at will by the Director General of Insolvency (DGI). It is inside bankruptcy laws.

Exceptions are Life Policy whereby it is paid to nominees upon death only, so the bankrupt does not gain in any manner "personally". Still it must be declared in the Statement of Affairs when first reporting in to Jabatan Insolvensi Malaysia. Seek permission to continue the premiums for the benefits of family members (if any).

A Bankrupt has negative value (Insolvent) upon adjudicated as a bankrupt, in short, no value in his/her life. Insurance Laws stated that it will not pay any financial benefits to a bankrupt. However, if permission has been granted by the DGI of which someone else is paying for the premiums (usually immediate family members), it is at the discretion of Jabatan Insolvensi Malaysia DGI to liquidate or allow it to continue based of circumstances and situations and at the same time the Insurance Company allows it with addition "loading" in conjunction with the decision made by DGI to allow it.

An example is "Education Policy/Savings" for his/her children.

takaful savings
Read the term "savings" and decide by/for yourself if it is assets or not, according to bankruptcy laws.

Anything that has cash value is an asset (even those debtors who owes the bankrupt) and is recoverable.

DGI manages the estate of a bankrupt, they can liquidated any assets. They need not seek permission from the bankrupt, it is auto given by bankruptcy laws. Read the section in bankruptcy laws on "The Powers of the DGI"
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