In a recent ruling, the Court of Cassation of Kuwait clarified that heirs cannot be held responsible for repaying the debts of a deceased individual if the loans taken by that person were covered by life insurance. The court emphasized that banks and financial institutions must rely on the insurance companies to settle the outstanding loan balances if the borrower passes away or is unable to work.
This judgment arose from a commercial lawsuit filed by a bank that sought to recover a substantial loan amount of KD 6,878,559, including accrued interest, from the heirs of a deceased borrower. The case involved a loan insured with a life insurance policy, which was meant to cover the outstanding loan amount in the event of the borrower’s death. Despite this, the insurance company refused to pay, prompting the bank to demand repayment from the deceased’s heirs.
The court ruled that, since the loan was insured, the insurance company was responsible for the debt settlement, and the heirs were not liable beyond the inheritance they received. The case was dismissed concerning the heirs, reinforcing that financial institutions must look to insurance coverage when such policies are in place.
