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Can I get life insurance after filing bankruptcy?

Researcher & Writer
August 20, 2014

Many carriers will outright decline an applicant who is going through a bankruptcy. Further, many will decline you if not enough time has passed from your BK. This is why it is so important to apply with the right company from the start.

At TermLife2Go, we review the top-rated best life insurance companies and top-rated no physical exam life insurance companies. We know each company's niche and help guide our clients looking for life insurance with a bankruptcy to the right company that is the most BK friendly in the marketplace. 

Bankruptcy and life Insurance

Due to the recent changes that many of the “major” life insurance companies have made regarding how they underwrite life insurance applications with current or prior bankruptcies histories, we here at TermLife2Go have decided it’s time that we briefly explain:

  • Why life insurance companies care if I had a previous bankruptcy.
  • What options do I have as someone who is shopping for life insurance with a bankruptcy on their record.
  • Can I get life insurance after filing bankruptcy?
  • How do I find the best quotes available for someone with a previous bankruptcy?

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Why do life insurance companies care if I've had a bankruptcy?

Well, the short and simple answer to this question is that life insurance companies care if have a bankruptcy because they like to use this information to first:

Decide if they want to invest the time, money and energy in reviewing an applicant’s life insurance application from the get-go.

And secondly:

Life insurance companies have access to an enormous amount of statistical data associated with those who have had a previous bankruptcy.  And when this information is applied to the masses, it can be extremely useful when deciding who they should insure, and at what price they should insure these individuals.

Finding life insurance after bankruptcy

Is your application worth the time and energy?

Probably the best thing about applying for life insurance for the consumer is… it’s free!

As someone who is considering getting life insurance, you’re able to:

  • Apply risk-free without having to incur any type of cost.
  • You’re not going to have to pay for a medical exam.
  • You’re not going to have to worry about getting your own medical records.
  • You won’t need to request your driving record.
  • Or even commit to accepting a life insurance policy once one is offered!

Fact is, by applying for life insurance all that one is doing is committing to the steps necessary to find out what it would actually cost should you decide that you do in fact want to get insured!

For the life insurance company, however, your application means something totally different.  In fact, when you decide to apply for life insurance, the process can actually be quite expensive for the life insurance company.

For example:

Life insurance companies will typically need to pay for:

  • A medical exam.
  • A DMV report.
  • A credit check.
  • A criminal background check.
  • Medical records release from your doctor/s.
  • Plus the hourly wages of a sales team, the underwriting department as well as an enormous support staff to make the process of applying for life insurance seem quick and easy!

The cost of all of which can only be recouped after you’ve been approved for a life insurance policy and then decide that you actually want to purchase the life insurance policy.

But remember!

You’re still not charged anything for applying!

This means that in order for the life insurance company to earn a profit, your policy will need to stay “in force” for up to several years!

For example:

Let’s assume that you’re a healthy individual, in your mid 30’s without any major health conditions.  If you decide to buy a $250,000 dollar life insurance policy, the cost is going to be really inexpensive!

Yet, the cost to the insurance company to underwrite and approve your life insurance application is going to stay the same!

Now, this really isn’t such a big deal, because let’s face it, you’re young, healthy and statistically speaking, very unlikely to pass away any time soon, but what if you quit making your payments?


Which brings us to why life insurance companies are interested in whether or not you’ve had a bankruptcy.

Insurance companies know that when things get tight, extraneous expenditures like life insurance are one of the first things to get cut from a family’s budget.  So unless you’ve kept your policy in place for several years, the insurance companies have assumed a huge risk yet earned nothing.

Translation:  Bankruptcies hurt insurance companies profit margins!

Therefore many insurance companies have made a “financial” decision to underwrite those with bankruptcies on their record differently than those without bankruptcies!

What else can insurance companies learn about someone who has had a bankruptcy?

Insurance companies love statistical data because it helps them make predictions about one's future.  Just of few facts that insurance companies can ascertain once they know that you have a bankruptcy is that:

  • Nearly 46% of all bankruptcies are related to some outstanding medical conditions.
  • 20% of those filing for bankruptcy hold a bachelor’s degree or higher.
  • Nearly 60% of those who file have a salary of less then $30,000.
  • And nearly 64% of all bankruptcies were filed by married couples.

Now with this in mind, it’s pretty easy to see why insurance companies get nervous about folks with bankruptcies.

For example:

  • What medical issue caused the bankruptcy?
  • Do you have a pre-existing condition?
  • Is the applicant bogged down with student debt which would make him/her less likely to keep their policy “in force”?
  • If this applicant is earning less than $30,000 annually, can they really afford the amount of coverage they are seeking?

Etc, Etc…

But there is hope!

It’s ironic that some of the most liberal life insurance carriers in regards to major health related conditions such as:

  • Diabetes.
  • Strokes.
  • Heart attacks.
  • And cancer.

Are also some of the most conservative when it comes to dealing with those who have had a previous bankruptcy.

In fact one of the nation’s largest life insurance carriers in the country currently has a zero-tolerance for anyone who has had a bankruptcy within the past 2 years.  This zero-tolerance is something that is relatively new to the industry and has caused quite a bit of turmoil within the industry for many insurance agencies who simply don’t have an alternative option for these otherwise healthy individuals.

So can I get life insurance after filing bankruptcy?

The good news is that as some of the “major” life insurance companies have chosen to no longer insure those with bankruptcies on their record, other highly rated insurance companies have seized this opportunity to fill the need within the market place that this has created!

This means that even if you’ve been told that you don’t qualify for traditional term or whole life insurance because of your current or prior bankruptcy, is may not be the case! Often, you can get life insurance after filing bankruptcy. The key is going with an agency that represents a complete list of life insurance companies so you have choices. 

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We are a team of life insurance experts with the simple mission of helping you find the best coverage for your unique situation. We research, review, and rank life insurance companies to make that process easier.