Trust Deed Expenditure Guidelines, Life Insurance Cover

May 25, 2011 - PRLog -- When people investigate entering a Scottish Trust Deed as a possible debt remedy, they will sometimes read that creditors and have expenditure guidelines and in some cases are put off looking at a Scottish Trust Deed for fear that they will need to give up ‘non-essential’ expenditures such as life insurance cover, some may even consider entering a Trust Deed but cancelling their life cover.

Should I cancel my Life Insurance Cover while on a Scottish Trust Deed?

The answer in short, is no. Life Insurance Cover is an accepted expenditure and in fact, the irony is that if you were to pass away while on a Trust Deed then the creditors may find that that they would receive a higher windfall if you were adequately covered for Life Insurance than if you were to otherwise complete all payments of the Trust Deed in your agreed repayment window.  

Therefore, it can be argued that you should actually Get Life Insurance if you do not have life cover already.

Why would my creditors receive a payout from my Life Insurance when I have children to provide for?

If an individual is deceased and leaves a debt behind then the creditor is entitled to make a claim on the deceased’s estate, regardless of how many dependents they have, status of their spouse or  the any other factor. It is possible to setup your Life Insurance up in a manner in which your creditors cannot make a claim on your estate. However, this should be discussed in advance of taking out the policy with your appointed insurance broker.
I want to cancel Life Insurance Cover so that more of my debt is repaid to my creditors.
If you choose to cancel life insurance or any other insurance premiums that you have in order to repay more of your debt to your creditors, this is of course your own decision. Whilst it is a very noble gesture, you should also consider the effect of cancelling any policy that you have.

If you were to cancel house and contents insurance and you suffered extensive flooding for example, would you be able to refurbish and repair our home?

If you currently have an Income Protection Policy as another example and you fell seriously ill, would you be able to repay your Trust Deed repayments in addition to your day-to-day household bills?

If you are looking to regain control of your finances and you are considering whether a Scottish Trust Deed is the most suitable debt remedy, you should speak to a money advisor as soon as possible. You may find there are other options open to you should you not be eligible but most importantly, a money advisor will be able to go through your income and expenditure details and advise if you are eligible for a Trust Deed and also if your expenditure is within the general creditor guidelines.

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As seen on STV, Trust Deed Scotland are an introducer of Trust Deeds in Scotland. The company website can be used to get free online quotes from providers with no setup fees.