Bankruptcy Life Insurance how Bankruptcy Affects Life Insurance Rates

Bankruptcies have become commonplace in the last few years with the economic recession that has swept the world. More and more people are out of work and have no other choice than to declare bankruptcy because they are unable to meet their financial obligations. While life insurance policies are not touched by bankruptcy in that you still have a policy in place to take care of funeral expenses and to leave some money to your family, declaring bankruptcy does have a detrimental effect on your premiums.

Once you declare bankruptcy, this item goes on your credit record and stays there for eleven years. When you apply for life insurance, the company does check your credit rating to see how well you manage your finances. Having such a negative item on your report will mean that your premiums will be higher.

Take a look at the monthly or annual premiums that you are now paying for your life insurance. Even if you are able to continue paying this amount after you declare bankruptcy, you have to allow for increases in the premium. If you don’t have life insurance, it is best to file for bankruptcy first and then apply so that you will know what your premiums will be rather than have to deal with increased rates.

The best advice for purchasing life insurance premiums when you are in debt and either know that you will have to eventually file for bankruptcy or have already filed is to take out a 10-year policy. In this way you know that the premiums will remain the same for that period of time. At the end of this period when it comes time to renew the policy and you are still in good health, there is a good possibility that your premiums will go down as long as your credit rating has improved.

After your bankruptcy claims has been discharged and you are in a better financial situation, you should look for quotes from several term life insurance companies. There are many such companies that do understand that people are having financial difficulties through no fault of their own. These companies will do their best to get you the best possible rates so that you have the life insurance that you need at an affordable premium.

Although you may be tempted to wait until the bankruptcy has been deleted from your credit report before applying for life insurance, this is not a wise financial decision to make. Life insurance is essential for everyone in all walks of life. You never know when you will need it.