Will I Qualify for Life Insurance After Bankruptcy?

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By now, you are probably aware that your credit score follows you, affecting insurance rates and your ability to lease an apartment. Oftentimes, it’s even part of the job qualification process. It is safe to assume, then, that a bankruptcy would negate your chances to obtain life insurance, right? The short answer – wrong. While your life insurance underwriter will consider your bankruptcy when reviewing your application, it does not automatically disqualify you.

Before we delve into the specifics of bankruptcy and life insurance, let’s talk about WHY this is even a concern for your underwriter.

Heightened Risks Associated With Bankruptcy

The bankruptcy process is long and arduous. It is a stressful time. One that forces us to reevaluate both past and current decisions and calls for a restructuring of virtually every aspect of our lives. From an underwriting standpoint, this is a valid concern, as stress and anxiety directly affect one’s overall health. As a result, some consumers battle depression and thoughts of suicide, both equally concerning to a life insurance underwriter. As a consumer, it’s important to remember that most life policies contain a suicide clause, barring death benefit payout should the insured commit suicide in the initial years of the policy.

When applying for a new policy, the insurer faces a great deal of upfront costs. From the medical exam to underwriting and agent commissions, it takes several years of premiums to recoup those fees. Therefore, the insured’s financial stability is a consideration. If they believe you to be financially unstable, the insurance company will not want to take on that risk, recognizing there’s a chance they may never break even on your policy.

What Steps Should I Take When Applying for Life Insurance After Bankruptcy?

When some of the major carriers chose to shy away from insuring individuals with a bankruptcy on record, a number of insurers seized this opportunity, tapping into a new pool of risks. Assuming you meet the rest of the underwriting guidelines, you should, hopefully, have several options available to you.

There are a few things you should keep in mind before starting the process:

– As a general rule of thumb, wait at least one year after your bankruptcy has been cleared, discharged, or settled. This is particularly true when filing Chapter 7.
– Work with an independent agent. Their duty is to guide you through the process, which starts with identifying the policies that best fit your unique situation and needs.
– Be upfront with your agent from the start. Provide them with information regarding your bankruptcy including: clearance date and any medical issues that might have contributed to your decision to file.
– Have a clear understanding of what your current budget is and how much coverage you and your family need.

Keep in mind that a bankruptcy can follow you for seven to ten years. So do not assume that, because it has been three years, it is irrelevant to potential insurers.

How Will Bankruptcy Affect My Current Life Policy?

If you already have a policy in force, you’re probably wondering how filing could affect that policy. The answer depends upon what type of policy you have in force.

If your in-force policy is a term policy, filing for bankruptcy should not affect the policy at all. As long as you are able to make your premium payments on time, the policy will remain in force.

If you own a permanent policy, things may get a little trickier. If your policy has been in force long enough to build cash value, there is a possibility that those assets could be assessed. We recommend that you seek the advice of a licensed attorney practicing in the state in which you reside, as bankruptcy rules vary from state to state.

If bankruptcy (or any other issues) is a part of your past, seek the assistance of a licensed independent life insurance agent. At Vista Life, we work with a number of life insurance carriers, ensuring the best possible outcome for your particular situation. If you have any further questions, do not hesitate to contact us at 866-450-2424 or via email.

Life Insurance for Those Living With HIV

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Those individuals living with HIV have, more than likely, found the life insurance market difficult and limited in scope in the past. Fortunately, this reality is beginning to change. More recently, insurance agencies have begun offering greater coverage options for HIV positive customers. With more powerful and effective treatment opportunities becoming available and the overall life expectancy of HIV patients extending, many companies are creating plans to effectively cover these at-risk individuals.

With more than one million Americans currently living with this disease, it is impossible to ignore this segment of the population any longer. The affected individuals are no longer being categorized as having a life expectancy too short to be offered coverage. And, as with most medical and social advancements, insurance companies are evolving to offer the insurance coverage these individuals need and deserve.

When AIDS and HIV first became a National, as well as International epidemic, most insurance companies saw affected individuals as too risky to cover. Indeed, the initial mortality rates were often so high and life expectancy so short, that insurance companies couldn’t properly calculate the risks and reasonable pricing needed to provide coverage. If coverage was available, it was often priced too far out of an individual’s budget. But, with advancements in the effectiveness of the pharmaceuticals available and the overall quality of life of HIV positive individuals improving rather dramatically, insurance companies are re-tooling their business plans to give even more coverage.

Still, you may be wondering what coverages are really available. Is my case unique? What can I expect to pay for a premium? Where do I even begin? Call us today so we can begin to lay out the available plans. At Vista Life, we look to provide the best coverage for each customer.

Our team will sit down with you and discuss options for coverage and costs and can design the right policy for you personally.

The Surviving Spouse’s To-Do List, Part 6: Dos and Don’ts

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As you’ve seen in our series of posts, we are discussing the challenges spouses who have recently lost their significant other often face. This is a difficult time to make decisions. And many, who haven’t planned for such a tragedy, can be left deciding next steps under much distress and confusion. Through this series, we have highlighted some critical plans to make now, which can help in this situation. For part 6, we are looking at some simple dos and don’ts for the time following a loved one’s passing.

First, some don’ts.

1) Don’t Make Any Quick Financial or Life Decisions

Avoid making quick decisions or plans without taking some time to consider all of your options and responsibilities. If you have a financial planner, now is the time to sit with them and look at bills, expenses, income, and money received from life insurance or settlements. Carefully consider what you’ll need and where you see yourself positioned over the next few years. This will more than likely be a big change for you, so take the time to create a working plan of action for the present and the future. Many of the decisions you will be making can be handled in a reasonable amount of time. By taking a breath and gathering your personal and financial information, you can make informed and reasonable decisions. This way, you can take care of yourself both emotionally and financially, without feeling like everything is happening in such a whirlwind.

2) Avoid Predatory Investors and Financial Analysts

Unfortunately, there are people in the world who will try to use your vulnerabilities to their advantage. Deaths in the family are especially popular for these predators, as they recognize that many spouses are emotionally unable to make good decisions. They then use these moments of weakness to their advantage.

It seems inconceivable that someone would be so callous, yet it happens all the time. Don’t speak to or make plans with anyone who you are not already working or familiar with. Ideally, you should already have a trusted advisor, before such events. If not, all the more reason to connect with one soon. Having trusted professionals in your corner in times of grief is key to receiving any unnecessary stress. You’ll have more than enough on your plate already.

3) Don’t Hide From the Inevitable

Even though this time will be extremely difficult, you cannot avoid the necessary next steps in your life. Life goes on for those around us and, although many will be sympathetic, you will eventually be expected to handle your responsibilities. You or a trusted associate will need to contact your spouse’s work and professional contacts, to inform them of the changing situation. Some arrangements may already be in place, per the pre-arranged conditions of your spouse’s passing. For others, you may be making new arrangements and payment schedules. Overall, it is important to not bury your head in the sand. By not addressing the loose ends, you may actually put yourself in a more damaging position.

What Are Some Dos for This Period of Time?

  • Gather important documents and information. Contact you accountant or financial advisor and inform them of the loss. Then, plan a time to sit down to discuss details and prepare a complete picture of your changing situation.
  • Examine your cash flow and expenses. Balance a budget with the new numbers. Understanding the financial situation you’re in may seem like a less than sentimental thought, but your spouse would want the best for you, and you shouldn’t suffer any more than necessary.
  • Collect life insurance and other payouts, correlating to your spouse’s passing. There may be some language which requires financial or legal help. Don’t be afraid to ask questions to your trusted associates, so you fully understand any stipulations, fees, or options available.
  • Claim your social security survivor benefit or any other payouts owed to you from your spouse’s passing. Some payouts have to be specifically requested, so examine any and all policies or stipulations, regarding your loved ones untimely death.
  • Order multiple copies of the death certificate. Most experts approximate between 10 and 15 copies. These will be necessary for many financial loose ends. Often, proof of passing is required, which the certificate satisfies.

This time is often filled with heartache and confusion about the path ahead. Remember that you do have control over a majority of the situation and you can navigate successfully. Having a plan of action, knowledge of you and your spouses earnings and expenses, as well as any post mortem arrangements will be key in easing the transition. In addition, having a trusted financial advisor or legal expert (or both) in your corner can be instrumental in helping you in your time of need. Most importantly, don’t wait until it’s too late. Starting to plan now with your spouse will be the best choice.

 

The Surviving Spouse’s To-Do List, Part 5: Evaluate Your Finances

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If you’ve recently lost a spouse, you likely have a million things on your mind. You’re being pulled in all different directions, with seemingly everyone needing something from you. And, although there are probably a number of people around and near you during this time, the grief process is really a lonely and scary time.

Today, we are sharing with you Part 5 of our 6-part series: The Surviving Spouse’s To-Do List. Since each individual’s situation is unique, we urge you to review and use this, as a guideline. Seek out at least one trusted confidante, who can help you make decisions. And, more than anything, give yourself the time to grieve.

Evaluate Sources of Income

Recent widows/widowers are urged to postpone making any significant financial decisions until they have had a moment to grieve. Unfortunately, most businesses expect their customers to regularly pay what is owed to them, regardless of what you are going through personally. To carry you through, until your grief feels a little less stifling, conduct a quick assessment of your income and expenses. First, make a list of your current sources of income, as well as any money that might be owed to you in the near future. This should include: current employment earnings, Social Security, dividends, interest, pension payments, and IRA distributions.

Your list could potentially include some income sources that will diminish or disappear in the coming months. For example, if you were receiving a spousal benefit from Social Security, you will no longer receive this. You may, however, be eligible for the survivor’s benefit in its place. As you review your income sources, keep in mind that some expenses will be reduced, as well. Often, the two reductions will balance each other out.

Evaluate Current Expenses

Now it’s time to start a list of your current expenses. If your spouse handled all the bill payments, take a look at your checkbook register or credit card statements. This should give you a good idea as to what bills were regularly paid and when. Separate your expenses into two categories: fixed and discretionary. Your fixed expenses should include items like: mortgage payment, car payment, utilities, auto and homeowners insurance, and groceries. Your discretionary costs will be items like travel expenses, gifts, and donations.

Once you have a list of your current expenses, you can develop a system that works best for you. Pay bills the moment they arrive, or write their due dates on the envelope, arranging them in the order they are due. Everyone has their own organizational system; find what works for you and stick with it.

Are There Any Outstanding Debts?

Time for another list – outstanding debts. You’ll want to place these in three separate categories: joint loans, individual loans in your name, and individual loans in your spouses name. This will make it easier when determining who must be contacted, regarding your spouse’s passing.

For any debts owed exclusively by your spouse, notify the lender immediately. Forward this information on to the executor of the estate or your attorney. You may not be legally responsible for paying off some of these loans. Anything that is owed should be paid for out of the estate. If you are a co-signer on the loan, notify the lender of your spouse’s passing and continue to pay the loans. If you have any questions, consult with your attorney. The last thing you want is for the lender to repossess something, simply because you didn’t understand contractual language.

Once you have a handle on your finances, you’ll be better able to assess what you have, what you need, and what you could do without. Again, don’t make any significant financial decisions right away. Consider your options and where you see yourself in the short and long-term future. The Vista family is here to answer any questions you might have and would be happy to help find someone to assist you with something we cannot. You do not have to be alone on this journey.