How does bankruptcy affect life insurance?
Bankruptcy is far too common these days, and going bankrupt is not always an option. This event will have a high impact on your lifestyle. If you consider filing for bankruptcy you may want to know that this will not go without repercussions as far as your life insurance rates are concerned.
Those who own a permanent life insurance will be able to retain a part of the cash value that has accumulated. The amount you will be allowed to retain varies from one life insurance company to another. Life insurance policies cannot be touched by bankruptcy, but bankruptcy will most likely affect your premium rates. When filing for bankruptcy you will have to choose between federal or state exemptions, you cant have them both.
Bankruptcy will appear as a negative item on your report. If you are considering bankruptcy you should first file for it and then apply for life insurance. This way you will know from the start what are the exact rates you will have to deal with. The moment you have improved your financial situation, you can start comparing quotes until you find life insurance at affordable rates. It's highly recommended that you consult a qualified attorney who can guide you through bankruptcy rules in your state.