Life Insurance and Bankruptcy

There are important things you need to know about life insurance if you are facing bankruptcy
What to know about life insurance
when facing bankruptcy.

If there’s one thing the recent recession has taught us, it’s that it’s possible to recover from almost any financial disaster. The 2008 recession saw many Canadian families lose their jobs, their cars, and their homes. In Ontario, many small towns struggled with the loss of the auto manufacturing companies that kept them afloat. Many had to declare bankruptcy in response to their changes in income, and while things were worse south of the border, the recovery has been a long time coming.

In 2012, bankruptcy rates dropped over 12% from their levels in 2011. Over 11,000 fewer people were forced to declare, and that is great news. It seems that for the first time in a long while, things are getting better. But for those who have already declared bankruptcy, their recovery may be bumpier than expected. Bankruptcy affects more than just a person’s ability to get a credit card. It can also affect whether they can be approved to rent an apartment, whether they can afford to go back to school, and even which jobs they will be able to get. As it’s now common for landlords, student finance lenders, and employers to check credit histories, it can be challenging to get your life back to where you want it.

Another area that’s affected, which people may not be aware of, is life insurance. Like any other financial product, life insurance companies take a close look at people’s financial history to determine if they can afford their premiums, as well as for other concerns. Every insurance company responds to bankruptcy issues differently. If you have filed for bankruptcy, here are some important things to keep in mind.

  • AXA, Empire, Equitable, and Standard Life: These insurance companies will consider issuing insurance policies only after bankruptcy has been discharged.

  • BMO: When purchasing insurance, BMO requires either a letter from the bankruptcy trustee stating that they are aware of the purchase and will allow it or for the bankruptcy to be discharged.

  • Canada Life: As long as there is no other coverage, they will allow up to $100,000 in coverage.

  • Desjardins: When insurance is purchased, they will need to verify the policyholder’s income and net worth, and they require that the bankruptcy be discharged.

  • Industrial Alliance: Permanent coverage will only be considered if the individual has a well-defined need, the coverage is for personal insurance only, and the coverage is at a maximum of $100,000. Plus, they will only consider a ten-year term plan.

  • Transamerica: Coverage of up to $100,000 will be considered if there is no other coverage.

The future is looking brighter, and it’s becoming easier for people to get back on their feet. While bankruptcy can seem like the end of the world, with time, it is possible to recover. When looking to purchase life insurance coverage, if you have had to file for bankruptcy, it’s important to know what kind of coverage you may qualify for and from which insurance institution.

For more details on life insurance and bankruptcy, please contact us at 1-866-899-4849, or visit our term life insurance quote page.

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