How does bankruptcy affect applying for life insurance and life insurance premiums? To understand this, it might be helpful to know why people file for bankruptcy. People usually file for bankruptcy when they have too much debt. How does bankruptcy affect other parts of your life and your finances? How does it impact life insurance premiums? Factors such as a poor credit score may negatively impact life insurance rates. Hence filing bankruptcy may not aid in this step when you are applying for life insurance. To read more about life insurance rates, check out this information on life insurance rates.
When you already have paid life insurance premiums, the bankruptcy court will typically leave the policy alone to protect your beneficiaries. If you have permanent or whole life insurance also, you may retain part of the accumulated cash value. The amount could typically depend on what state you reside in, since regulations may vary and if your life insurance premiums are taken for someone else, you could surrender them to the bankruptcy court when you file for bankruptcy.
A bad credit score is usually considered irresponsible and therefore you might be not as eligible for good rates for life insurance premiums. Many life insurance companies are typically concerned about your ability to pay. When applying for life insurance, you may want to take these factors into consideration, but keep in mind that if you do not apply for life insurance, you might risk the financial futures of your beneficiaries. To find out more about applying for life insurance, visit the article “What is Life Insurance Underwriting?”
If you can do so, it is typically important to raise your credit score before you are applying for life insurance to help get a lower rate. In a case where you have filed for bankruptcy but increased your credit score, you may be able to reapply and possibly get a better rate . In fact, a discharged bankruptcy could stay on your credit report for anywhere from seven to 10 years and you thus could have better credit and improved rates when the bankruptcy period is over.
