Under Barbados law, the rights and interest in a life insurance policy are exempt from seizure and execution by the creditors of the insured.
In addition, while a spouse or child of the policyholder is designated as a beneficiary of the policy, the rights and interest of the policyholder in the insurance money and in the contract are exempt from seizure and execution. Therefore, a life insurance policy affords a high level of asset protection even if the insured enjoys important contractual rights under the policy. In contrast, under a trust arrangement, asset protection can be jeopardized if the contributor holds broad powers. The ability to designate beneficiaries under a life insurance contract is another attractive feature. On the death of the insured, the insurance proceeds are remitted directly to the beneficiary and do not have to go through the estate of the insured. As a result, the insurance proceeds are not subject to probate fees and are protected against the claims of the creditors of the insured. Barbados life insurance thus constitutes an excellent alternative to a trust as a wealth preservation tool.