What Does Bankruptcy Have To Do With Life Insurance?

When we’re gathering information to find you the best options, we’ll always ask the question – “within the last 10 years, have you filed for bankruptcy?” Many consumers who have had a bankruptcy respond: “What does BK have to do with life insurance?” Good question.

Logically thinking, it shouldn’t have any effect on an application. I mean, what does this have to do with your health? We don’t check your credit on a life insurance application, so what could a bankruptcy possibly do with life insurance?

I don’t have a good answer for this question so I called underwriters regarding why RECENT bankruptcies effect a life insurance application and their answers are all over the place:

Suicide risk is one effect. To me this seems a little backwards. Shouldn’t the suicide risk be BEFORE the bankruptcy? Anyway, this was brought up in a conversation with an underwriter.

Emotional disorders. Those who have bankruptcies sometimes develop emotional disorders, anxiety issues or need to begin medications within a few years of the bankruptcy.

I personally don’t think bankruptcy should effect the ability to purchase individual life insurance, but these are the best answers I can find.

If you’ve had a bankruptcy, here’s what you can expect:

Chapter 7 bankruptcy: you’ll have to wait for 1 year after the discharge to apply for life insurance.

Chapter 11, 12 or 13 bankruptcies: obtaining life insurance coverage is no problem as long as you’re making regular debt payments.

The key is using the right life insurance company if you’ve had a bankruptcy. Each carrier will look at your BK differently (some more favorable than others). An experienced and independent life insurance agent can help you find that carrier.

Give us a call today or fill out the for on the right and we’ll go over your choices.

About Jeff Root

is the owner of rootfin.com. He's an independent life insurance agent who has helped 1,000's of consumers purchase life insurance online and over the phone.

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December 3, 2011 at 2:50 am

This is a very interesting article. It’s unfortunate but bankruptcy is something that needs to be considered, especially with our current economic situation. Thanks for the post.

December 5, 2011 at 4:36 pm
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