Bankruptcy Affects Your Insurance Policy

If you are declared a bankrupt - your insurance policies may be affected. Bankruptcy may cancel some insurance policies, leaving you without cover. This is more likely to happen if you pay for your insurance in monthly instalments.It’s important to check what impact it’ll have before you go bankrupt to make sure you’re still safely covered.

Default On Premium - If you do not pay your premium on the due date, you will have have 30 days grace period to pay up or the policy lapsed. .

What to do if your insurance is cancelled - If going bankrupt means you’ll have to pay off the rest of the year’s insurance instalments, there are a couple of options:

a: Request a third party (wife, children etc) to pay your premium.

b:  Utilize the Advance Policy Loan (APL uses cash value under ordinary life insurance) or funds (under unit-linked policy) to pay your outstanding premium. Once the cash value/funds are exhausted, the policy will lapsed.

c: Convert your policy to a term policy by utilizing the cash value/funds. The number of months covered will depend on your available cash value/funds.

Can you get a new insurance policy during bankruptcy - It is critical that you retain your existing policy (whenever possible) because it is difficult for a bankrupt to revive lapsed policy or purchase new policy. A bankrupt would need the approval from DGI to revive or buy new policy. In the event the insurers become aware of your bankruptcy - this may make it harder for you to get a policy. You may be refused or you may have to pay a higher premium.