New Life Insurance right before Filing???

[Moneypenny]

Hi,

I never really thought much about financial security or planning for the future. That's probably why I went BK in the first place. Didnt look over my affairs at all. This BK has really woken me up. When I thought about life insurance or investments before, I just thought, I got to pay my CC first then I can think about such things. Now I think about it, my wife and kids would be screwed if I died, and I would be too if she died cause I cant pay for childcare.

I honestly want to get some term life insurance.

But, I am filing in the next month or two.

I am below median but the term life, like $150-200 each a total of $300-400 a month, would also conveniently cover my sched J margins.

Is this ok? I have a little diddly insurance thing deducted by my employer but it would cash at 200,000, not enough to support my family and twin five year olds. My wife is foreign resident and cant earn much at all.

And if she died, I would have no way to care for my kids and work, and I have no insurance on her.

So its a reasonable situation, but what about the timing?

Thanks!

MP

[MrsDixon]

You can purchase life insurance but are you saying $300-$400.00 per month for insurance? Yikes. That's a lot. How much coverage are you going to purchase for that?

I have 250K and it costs $44.00 per month.

[Moneypenny]

I just filled out an online form for both me and my wife, probably not the most competitive rates. I need about a million for my family if I die (public college in 13 years will be how much? probably a million wont do). If my wife dies I need about 500K. Not sure i remember how i came up with those figures but remember it was over a 100 for each case and obviously much more for the million.

is 300-400 a month in life insurance unreasonable in regards the BK? Would 200 be better? By the time I have a lawyer they could advise me to cut back I suppose, but I feel I am so close to filing (1-2 months) that I better get the insurance this week.

Mr. MP

[Mensa1]

MP:

Yes, buy the term life NOW. It will take a few weeks or more to place the ins. If you waited until after filing, no dice; there isn't a std comapny out there that will issue you a policy for at least 1 yr beyond discharge. So get it now.

The cost depends on a couple of things; Ht and Wt, over all health conditions, medications, etc., length of the term of the policy. 20 yr term costs more than 10 yr, etc. Maybe you don't need the longest term today, you need a 10 yr term plan which should be lots less. The company you apply to will have a huge impact on the rates. If you wish to provide some specifics, either in the thread or pm, I can steer you in the right direction. The available companies also depend on which state you reside.

The costs you refer to are allowable for the means test. You just don't want to be overpaying for any commodity, especially something like life ins. 10 yr term if you are ht wt proportional and no serious health issues should be pretty inexpensive. Then maybe with lower rates you can get even higher coverages, if you feel better with that amount.

[ConfusedinOC]

MoneyPenny:

I had the same question a while ago and reading through the forum it appeared that life and disability insurance was an allowed expense. I went ahead and started the process. Due to me being overhweight I thought I would never get covered. Fortunately I was able to find term life 30yr/500k and finalizing the disability. Due to my higher risk my premiums are $230 (life) and $190 (disability) per month. My wife is also getting a term life policy to replace her current $100k pollicy. I went to see a lawyer this past week and he stated that the expenses would be allowed. As stated in previous posts the process can take weeks if not months to get everything finalized and make your first payment so get on it.

[Moneypenny]

Thanks!
and, you dont think it will be a problem that I get insurance right before filing?
Also, DOES MY BAD CREDIT RATING pose a problem? I haven't paid my bills in months and its gone way way down i'm sure.

Mr. MP

[Mensa1]

Thanks!
and, you dont think it will be a problem that I get insurance right before filing?
Also, DOES MY BAD CREDIT RATING pose a problem? I haven't paid my bills in months and its gone way way down i'm sure.

Mr. MP

They don't check credit for life ins unless you are getting large face amt, like 5 mil+. The only question every application asks is IF you have filed for Bk in the past 3 or 5 yrs, depending on the company. Not a problem to get life ins right before. The life ins co wouldn't like it if they knew, but the TT shouldn't mind, especially that you are showing good judgment to protect the family, just in case.

What company are you looking at... face amt and and mo rate... and based on that little bit of info I can compare what you could get elsewhere... (let you know if what you are seeking is a decent deal or not). I don't need to know anything else, that info will tell me all I need. NO personal info.

[Moneypenny]

thanks! so you are saying the trustee will actually LIKE that I bought life insurance?

I called up Amica where I have home and auto, and this is what I got:

1 million on me 20 yr term ("premium select" class in terms of my age 46 and everything else) 118 a month

500K on my wife 20 yr term (47, but "preferred select" probably because her father died at 56 of lung cancer, a smoker)= 77 a month

Mr. MP

[Mensa1]

thanks! so you are saying the trustee will actually LIKE that I bought life insurance?

I called up Amica where I have home and auto, and this is what I got:

1 million on me 20 yr term ("premium select" class in terms of my age 46 and everything else) 118 a month

500K on my wife 20 yr term (47, but "preferred select" probably because her father died at 56 of lung cancer, a smoker)= 77 a month

Mr. MP

There is nothing that TT can say about it bc it is an allowable expense. Besides it is the right thing to do...

The rates you rec'd are based on you both being excellent health, good ht and wt, and assuming that being accurate, the best rate for you is 109.36 mo aand 57 mo for your wife. There are appx 15 companies that offer rates lower than the quotes you rec'd, by a few dollars, but Amica is decent too. The major issue for you is to make certain that the policy is issued before you need to file the Bk, so the most important thing over a few dollars more or less each month, is the speed of underwriting. Some companies are turtles, while others are hare's. Let me know if you need anymore help as I could refer you to an agent in your state, if you would like.

[Moneypenny]

Wow thanks for the info. I do like and trust Amica as a company, but it does look like its up to ten dollars more expensive for each policy.
we are good on ht/wt ratio, but not perfect. i am 5' 9" and 180 and my wife better. i dont know how fine tuned their scales are. we are both without any marginal health history. we are in Califorrnia.

I dont even know what are the good companies anymore, since after the meltdown i know I cant just go on name recogniition as it seems the more you recognize the name the worse the company is.

[Mensa1]

The key element here is the time to process the application and get you to a point of policy issue, well in advance of any Bk filing. You would not want to apply, then before the policy is issued, file for Bk because you are making a material change that would affect the consideration by the ins co.

Amica is fine, as long as their processing time meets the above.

[Moneypenny]

thanks.
Do you know which companies issue policies the fastest?
I think i have to file by the end of april

[Moneypenny]

What do you think about applying for life insurance, answering the questions truthfully at the time (i.e. have you filed bankruptcy? truthful answer: no) and then after you take the blood tests and pay the initial premium etc., but before they issue the final policy, you then file for bankruptcy?

I guess I am also curious about similar things like, you get diagnosed with cancer or something. Although that has nothing to do with me.

I am working with a different online middleman company and they did find the best rate for my wife's pre-existing condition. I myself am already the cheapest, healthiest case, except for the bk.

I am expecting the term life policy to be issued about two weeks after I filed bk.

MMP

[Mensa1]

MMP:

The fine print in most policies states that if anything has materially changed since the application then you need to disclose this info prior to accepting the policy. Assuming that you don't, the policy could be recinded if you died during the contestability period of the first two yrs. The determing factor here would be, IF you had properly disclosed the info at the time the policy was issued would the company have still issued the policy? If not, then they would have NO obligation to pay the death benefit. There also some circumstances where they might have issued the policy with a higher premium due to the new info, and in those cases they might pay the claim, only after the difference of the premium, plus interest is paid. One never wants to be in a position where the life ins co is potentially on the hook for paying out a large claim and they are determining if they have a way out of it. This does happen, especially when a death occurs within the contestability period of the first two years, they go over the claim with a fine tooth comb. Guess you can't blame them really.

[Moneypenny]

I agree its all perfectly fair of them to set the terms of the agreement.

I wonder what happens if you file bk after the initial information gathering period, before the final policy is issued (as discussed above), and someone dies AFTER the 2-year contingency period. Does the Ins Co have to pay out?