Hi,
How negative net worth affects the amount of life insurance coverage one can get?
I have a 40-year-old customer who would like to apply for 30 year term $1,500,000 DB but his net worth is -$161,000. His assets worth is $41,000 and liabilities (mortgage) $201,000.
Net Worth = $41,000 - $201,000 = -$161,000
I know that the bigger net worth the more life insurance you can get. Since this customer has very little in comparison to what he owes does it mean that he qualifies for less as well?
On the other hand his life insurance needs are bigger that a person's with the same income, family situation etc. but with positive net worth.
I'm assuming that a lot of you on this forum have customers with negative net worth so you'll know the answer to my question.
Thank you in advance for helping me understand the issue.
How negative net worth affects the amount of life insurance coverage one can get?
I have a 40-year-old customer who would like to apply for 30 year term $1,500,000 DB but his net worth is -$161,000. His assets worth is $41,000 and liabilities (mortgage) $201,000.
Net Worth = $41,000 - $201,000 = -$161,000
I know that the bigger net worth the more life insurance you can get. Since this customer has very little in comparison to what he owes does it mean that he qualifies for less as well?
On the other hand his life insurance needs are bigger that a person's with the same income, family situation etc. but with positive net worth.
I'm assuming that a lot of you on this forum have customers with negative net worth so you'll know the answer to my question.
Thank you in advance for helping me understand the issue.