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What Factors Will Affect Your Life Insurance Policy?

Example #1 – Are You Bankrupt?

Filing for bankruptcy can be a daunting task for many people. Therefore, one should know the kind of information that he or she should provide in order to protect his or her assets.

life Insurance Bankruptcy A life insurance policy is a very valuable property that one may have at his or her procession. This is because creditors may be interested in acquiring a share of interest generated by the policy’s values. However, there are federal and state laws that protect life insurance against the claims made by the creditors.

Types of Bankruptcy

There are two types of bankruptcy. These are chapter 7 and13. A chapter 13 bankruptcy is where one can hold on to his or her assets and are not subjected to risk of losing the property. However, one must repay some of the debts for a period of three to five years. If the cash value for the insurance is more than the rate of exemption in the state the individual is living, chapter 13 is the best option. There is a mean test that is usually done during filing of bankruptcy. If one passes the test one is eligible to filing a chapter 7 bankruptcy. One has to liquidate his or her assets for a period of four months by law. This means that the insurance can be affected.

One of the worst scenarios is where one is liquidating his or her assets then proceeds to borrow money from their retirement funds and life insurance. These are the only assets that are always protected at the time of bankruptcy. During the filing of bankruptcy, it is important to disclose everything including cash value of his or her life insurance policy. If one fails to do that, there is a high risk of losing the assets.

Under the federal and state bankruptcy law, one filing for bankruptcy may choose exemptions under the former, but not both laws. Under the exemptions; one can protect almost $10,775 cash value of life insurance.

How to Qualify and File

In order to be eligible to file bankruptcy under state protections, you must be considered a resident and live in a state for 24 months.

In order to be eligible for bankruptcy filing under state protections, one must be a resident and living in the state for 24 hours. In some states like Illinois, whole life insurance cannot be interfered with by the creditors such that it can provide support to the dependent. However, legal interpretation entirely relies on the sitting bankruptcy judge.

In summary, bankruptcy can interfere to some extent with life insurance depending on the type of bankruptcy filed, state and federal laws and the decisions of the bankruptcy presiding judge. False information concerning the cash value of life insurance that one owns can also interfere with life insurance.


Examples #2 – How Much Do You Weigh?

Insurance companies offering life insurance policies look at the trends in population health and lifestyle to help them calculate their rates. Anything that is likely to affect someone’s life span such as body weight is therefore factored in.

Diet and Life InsuranceIt is important to know if your weight is at a level considered to be healthy before applying for a life insurance policy. A consultation with a doctor should guide you on what the healthy weight range is at your age and height. The healthy weight range is based on a comparison of height to weight ratio as the America Medical Association dictates. Your weight to height ratio affects the rate of your life insurance premiums.

What Insurance Companies Analyze

Insurance companies factor in the weight of life insurance policy applicants purely for medical reasons. Since statistics indicate that overweight people with high levels of cholesterol puts them in a high-risk category. Being overweight is an important factor for insurance companies since it may be the cause of several other medical conditions that could potentially be life threatening. These include diabetes, heart disease, and liver disease. Insurance providers consider weight to be a strong indicator of future medical issues. It is noteworthy that they also use other medical details of the applicant to calculate the insurance premiums.

Before applying for life insurance coverage, you should take measures to lose weight to be able to get better rates. It is worth waiting some time to apply until you feel comfortable with your weight. Buying a life insurance policy when you are classified as overweight does not mean that the policy will remain that way indefinitely. You can apply for a fresh medical exam so that the insurance company may revise your rates. This move may lead to your rates being adjusted to more affordable ones.

Advantages From Living Healthy

As an incentive to drive people to lose weight, insurance companies introduced an option for people to get better rates by proving that they can live a healthier lifestyle. This is beneficial to both parties since the policy holder will have an affordable rate for premiums and the insurance company will benefit from having healthier clients. This reduces the risk taken by the insurance company to hold the insurance policy for the client. The client will eventually save a considerable amount of money in the long run.

Living a healthier lifestyle will ensure that the policy holder reduces weight, which causes several medical conditions. Companies that offer life insurance policies offer different rates because of the methods they use to calculate the rate for premiums. It is advisable to get quotes from several companies with detailed information on how weight affects individual companies’ calculations. This will ultimately lead you making the best decision about which company has the best insurance policy for you.


Example #3 – You Are Getting a Divorce

Life Insurance and DivorceDivorce is an issue that can make things difficult on a family, but it can also complicate matters financially. Most people in this situation have to deal with splitting up a family house, assets, savings and debt but often overlook life insurance policies. If you have a life insurance policy and you get a divorce, a few different factors must be evaluated.

If you settle the divorce outside of court, you may get to decide what to do with the insurance policy on their own. You and your spouse can work out what happens to the policy. If you let the courts decide what happens to your financial assets, you will have to do what the court says in regards to your policy. Sometimes the court will require you to maintain a life insurance policy with your ex-spouse as the beneficiary as a way to guarantee that alimony or child support is paid if you pass away.

When you get a divorce with a life insurance policy, you have to consider the beneficiary of the policy. As long as the court does not require you to keep your ex-spouse as a beneficiary on the policy, you have the legal right to change the beneficiary at any time. You will simply have to contact the insurance company and ask for a beneficiary designation change form. For example, if you get a divorce and then remarry, you may not necessarily want your ex-spouse to be the beneficiary on your life insurance policy. Because of this, you can change the beneficiary to your new spouse. If you forget to change the beneficiary on your life insurance policy, the money could go to your ex-spouse unexpectedly.

If you purchase a whole life insurance policy or some other type of policy that includes a cash value, this could lead to further issues when getting a divorce. Typically, when you file for divorce, you will have to split all of your assets in half. If your life insurance policy has a cash value, your spouse would be entitled to half of that amount.

When this happens, you have a few different options to consider. One option is to cash out the policy and give your spouse half of the value. Another option is to keep the policy and take out a policy loan for half of the cash value. With this approach, you would be able to keep the policy intact and repay the policy loan over time. A third option is to use other assets that you have to pay off your spouse for half of the policy value.

Regardless of what happens to your existing life insurance policy during a divorce, you have to reevaluate your need after the divorce is complete. If you are going to be single without any beneficiaries to be concerned with, you may not need another life insurance policy right away. If you still have kids to take care of or a new spouse, making sure that you are covered in some way should be a priority.

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