Life Insurance - The proceeds of life policies

In the normal course of events, the proceeds of an own-life policy are payable to the assured’s estate, for distribution to the beneficiaries identified by any trust or will. In the absence of any express disposition, there is a statutory trust in favour of a spouse and children under the Married Women’s Property Act 1882. Third party creditors of the assured in general have no claim over the proceeds of any life policy insofar as there is an identified beneficiary. The question for the House of Lords in Foskett v McKeown , June 2000, forthcoming in [2000] Lloyd’s Rep IR, arose from a relatively simple scenario: if the assured uses the funds of a third party to pay the premiums on an own-life policy, then following the assured’s death, does the third party have any claim against the policy monies themselves or is the claim to be made against the assured’s other assets? Assuming that there is a claim against the policy monies, is that claim simply for the premiums misappropriated by the assured, or is it for that proportion of the policy monies which were obtained by use of the third party’s money? As will be seen from the following discussion of the case, there is often an inverse relationship between the simplicity of a set of facts and the complexity of the legal analysis necessary to resolve disputes arising out of them. The case divided the House of Lords 3:2, and had indeed earlier divided the Court of Appeal 2:1.