Possibly. In the event of a bankruptcy, the treatment of permanent life insurance cash value can vary depending on the type of bankruptcy being filed and the laws of the jurisdiction in which the bankruptcy is being filed.
In general, the cash value of a permanent life insurance policy may be considered an asset in a bankruptcy case and may be subject to seizure by creditors. However, there are also certain exemptions and protections that may apply, depending on the laws of the jurisdiction.
In a Chapter 7 bankruptcy, the cash value of a life insurance policy may be subject to seizure as part of the bankruptcy estate. If the policy is considered an exempt asset under the bankruptcy laws of the jurisdiction, it may be protected from seizure.
In a Chapter 13 bankruptcy, the cash value of a life insurance policy may be considered a source of disposable income that can be used to repay creditors. However, the policyholder may be able to protect a portion of the cash value of the policy as an exempt asset, depending on the laws of the jurisdiction.
There is a good article and details by state here.
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