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 options.