Is the cash value of a life insurance policy protected from creditors if the insured files for bankruptcy?

You'll be able to retain a specified amount of the cash value that has accumulated within any permanent life insurance policies you own.

Under federal exemptions, you can protect a certain amount of a life insurance policy's cash value. Also, married couples may double all exemptions under the federal bankruptcy code.

Federal bankruptcy law specifically allows each state to "opt out" of federal exemptions and set their own guidelines pertaining to assets you can protect from creditors ina bankruptcy. Many states have chosen to opt out and others allow you to choose between state or federal exmeptions. No state is solely under federal exemptions.

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You cannot take both federal and state exemptions; when filing for bankruptcy you have to choose one or the other.

Read how personal bankruptcy affects your life insurance and annuities.