Your life insurance can be shielded from creditors

There is a law in Quebec that protects you against the seizure of your life insurance policy by creditors. You have to carefully select the beneficiaries in your contract for this to be applicable. For optimal protection, we can help you pick the right type of beneficiary.

How to make the right choice of beneficiary?

When buying life insurance, the insurance company will ask you to add the names of people who will receive the death benefits from your policy after you pass. In order for the protection against creditors to be valid, you must:

  • Add an irrevocable beneficiary. This person cannot be removed from your insurance file unless they voluntarily withdraw themselves. You could list your spouse if you are married. It is possible to name your partner if you are in a civil union;


  • Designate several specific family members as revocable beneficiaries. These people can include your partner, children, grandchildren or parents.

What does the term ‘common-law partner’ mean under the law?

Under Quebec law, couples must be in a civil union or married for life insurance protection against creditors to be valid. The person you add to your policy could be designated as an irrevocable beneficiary to ensure that creditors cannot seize the amount accrued in this life insurance.

Remember that if you do go with the irrevocable beneficiary option, that person must be willing to withdraw their name from your insurance policy. You should therefore make a well-thought-out choice.

By picking the right type of beneficiary, your life insurance is protected at all times from seizure or redemption by your creditors. Don’t hesitate to contact one of our financial security advisors.