As discussed elsewhere one of the first things you do when you file bankruptcy is to choose either the 703 or the 704 exemptions.
Life Insurance is treated differently under each set of exemptions.
Life insurance under the 703 exemptions the following is exempt under CCP 703.140(b)(8):
The debtor’s aggregate interest, not to exceed in value twelve thousand eight hundred sixty dollars ($12,860), in any accrued dividend or interest under, or loan value of, any unmatured life insurance contract owned by the debtor under which the insured is the debtor or an individual of whom the debtor is a dependent.
Under the 704 exemptions, the following is exempt under 704.140(b)(8):
The debtor’s aggregate interest, not to exceed in value nine thousand three hundred dollars ($9,300), in any accrued dividend or interest under, or loan value of, any unmatured life insurance contract owned by the debtor under which the insured is the debtor or an individual of whom the debtor is a dependent. At first, this sounds less generous than the 703 exemption but consider this which applies to the 704 life insurance exemption:
If the judgment debtor is married, each spouse is entitled to a separate exemption and the exemptions of the spouses may be combined, regardless of whether the policies belong to either or both spouses.