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New Term Life Ins before DC?

Not applicable

New Term Life Ins before DC?

Hi everyone, just curious on everones opinion according to a life ins carrier underwriter, they want to know the following. 

- reason for bk (obvious one)

- reason for face value, lets say 500k on a term policy

    Now the odd ones...


- Can you legally apply before DC, reasoning you'd be 'gaining an asset' during a open BK

- Can you get into a 'contract' during a open BK


They said ask the trustee for approval, I understand in a CH13, but on a Ch7 post MOC just awaiting DC, the latter 2 questions are striking me as odd. 

Message 1 of 5
Community Leader
Mega Contributor

Re: New Term Life Ins before DC?

Message 2 of 5
Not applicable

Re: New Term Life Ins before DC?

I mean I don't see how a term life insurance policy held by the debtor is an asset for the debtor. It doesn't mature until death. There's no cash, or accumulating cash value there for the bankruptcy. Now if it was a whole life policy that may very well be different because term and whole life are 2 separate entities.


I don't know why the underwriter would be giving you such a big problem over this but you're less than 60 days away from 'freedom'. So, if they give you a hard time I'd just say I'll see you in August after discharge...

Message 3 of 5
Super Contributor

Re: New Term Life Ins before DC?

Term life isn't considered an asset like mentioned above, there is no cash value. You are fine to apply for and accept term life insurance. Heck, even a UL or WL wouldn't have any value right away unless you were dumping tons of funds in at the start.
Filed BK7: 7/2012 (start score EQ 560 / TU 529) Discharge 10/2012
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Message 4 of 5
Not applicable

Re: New Term Life Ins before DC?

Thanks for the responses, that is exactly my thought, a WL, UL, VUL those can be, after awhile or dumping into a 10 pay WL or Single Pay WL, that would definatly raise an eyebrow of the court if not disclosed/approved.


Which is why the application for bk ask's about cash value life ins, but ter is not an asset at all; maybe a return of premium, but even then you're only going to get the premium back you put in, without interest. That is if you do not die before and you never miss the payment. Statistically a lot term policies/life policies lapse well before death. 

Message 5 of 5
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