Life Insurance and Bankruptsy

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My husband purchased a term policy in 2011, He was asked If he ever claimed bankruptcy he had a business that did claim bankruptcy although no debt was ever charged off. It was over 10 years ago prior to applying. He was told verbally over the phone that since it was over 10 years check no. We are wondering if this can become a problem down the road. All of our payments have been current although we can’t seem to find an answer. Thank you”

Asked March 12, 2019

1 Answer


No, it will not affect your husband's policy down the road. Life insurance companies will refrain from offering policies to individuals with a record for bankruptcy. However, this is only if the bankruptcy has not been discharged. In your specific case there is one major difference. The bankruptcy in question happened ten years ago. As you know most ticks appearing on your credit can be removed after seven to ten years. This is because they have a shelf life. Well, bankruptcy is not different.

As with most things bankruptcy has a shelf life. If you file for bankruptcy, or a company you own files for bankruptcy, it can stay on your credit report for ten years. This does make it hard to apply for certain things. However, once the bankruptcy is discharged you are in the clear. This either happens through settlements or because the ten years expired. In this case as the ten years have lapsed it is officially off of your husband's record. Therefore, as far as the insurance company is concerned it does not exist.

The agent told you to check 'no' because your husband's bankruptcy technically does not exist. So you do not have to worry about complications. There is nothing to adversely affect your husband's policy.

Answered March 14, 2019 by truss

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