Protecting Life Insurance During Bankruptcy
Bankruptcies are difficult emotionally and financially because your creditors are intent on recovering the debt you owe them. That’s fair. But you must protect what is allowable by the Federal or State Government to give you a financial footing afterwards. Don’t forget to protect your life insurance when filing for bankruptcy.
When going through bankruptcy, make sure everything is not taken from you during the process, including your savings. Protecting your life insurance is important. If you overlook this, creditors may leave your family with nothing after your death.
Paying creditors is important, but you must also prepare for life after bankruptcy. Creditors aren’t interested in you or your family’s financial status. They want whatever they can get. This means you may end up in a hole that is nearly impossible to escape. Protect your safety net!
What is protected?
Life insurance is too important to give up. If you were to pass, the money helps pay expenses so your family does not end up financially strapped. To prevent creditors from taking everything, you need to understand what you can do. Under federal exemptions, you can protect up to $12,250 (check the current amount allowed) of a life insurance policy’s cash value. Married couples can double all exemptions under the federal bankruptcy code. Check with your bankruptcy lawyer to ensure all allowable assets are protected, especially your life insurance policy.
If you are afraid the bankruptcy will take your life insurance, make it exempt. This will give you the chance to keep your money, or at least some of it, to assist your family later.
Know the cash value amount your state allows you to protect. All states are different. Get professional help, if needed, to take advantage of all you can. An option is cheap life insurance. It protects you because it puts you under the maximums of several states. This makes it possible to keep all your money.
Taking all allowable exemptions can give you peace of mind, which is what you need during a stressful time. As long as you qualify for the exemption, take it! Enjoy the security of knowing your family will have something, regardless of the situation they find themselves.
Buying Life Insurance After Bankruptcy
Waiting for your bankruptcy to be completely off your records is not a good excuse to delay applying for life insurance. If cost is an issue, consider getting a 10-year term policy to make sure your family is protected. This gives you something until you are back on your feet. The only risk is failing health which could make purchasing life insurance ten years later more expensive or unattainable.
Before applying for affordable life insurance make sure your bankruptcy is completely discharged. Most insurance companies won’t underwrite you if you’re in the middle of the bankruptcy process. If the bankruptcy has been discharged, you shouldn’t have any problems finding an insurance company willing to underwrite you.
The Internet is filled with free online term life quotes that allow you to get a quote in minutes. Be sure to let them know you have filed bankruptcy recently. One of the biggest mistakes people make when applying for life insurance is not being truthful with the carriers. They will know if you have a bankruptcy. If you lie, it will hurt your chances of getting approved.
Understand Your Options
If you are facing bankruptcy, it is important to do everything possible to benefit you and your family afterwards. Don’t let creditors take your legally allowed exemptions. Protect them! This gives you and your family a financial cushion afterwards. As creditors fight for what is theirs, you must fight for what is yours. By taking advantage of what is available, you can keep yourself in the green and make it easier to get back on your feet after bankruptcy.
