What happens to my debt after death?
Many people underestimate the importance of life insurance. This results in them leaving their family entirely too little, and leaving an inheritance that includes mostly debt. Life insurance is about covering more than just the cost of a funeral. The funeral itself can come in at over $10,000 with simple arrangements. This doesn’t even begin to cover any other debt that was in the name of the deceased.
Making the mistake of assuming that this debt just goes away after the primary account holder has died can be both costly and heartbreaking. In truth, few people realize the different types of debt that they’ve accumulated over their lifetime. We pay these bills each month without really thinking about where they came from or where they would go if we passed away suddenly. The death of a loved one is traumatic enough without having to deal with creditors directly after their passing.
It’s very important to consider life insurance for these reasons. No one wants to leave their families with their debts after they die. It’s very important to speak with a licensed insurance agent who understands the types of life insurance that you may need. Different levels of debt and personal accumulation require different amounts of life insurance. You want to make sure that there will be enough there to cover the cost of your funeral and any debts that should arise after your death. If you’re the primary breadwinner for your family, you also need to consider this. Make sure that your family isn’t going to lose everything shortly after your death because they have no way to make up for the lost income.
Fortunately, there are ways to tailor a life insurance policy to the specific needs of every person. There are different kinds of policies available, and even if you’re not in the best health there are options. It’s very important to get life insurance as quickly as possible to prevent denial due to age or the onset of illness. You may be required to submit a medical exam from the insurance company to make sure that you are healthy enough for the policy. They tend to acquire this for policies with higher payouts. They don’t want to ensure someone with terminal cancer for a million dollars a week before they die. As heartless as this seems, It’s actually good business sense. Look for a life insurance company that can provide for all of your debt at a reasonable price.
These are just a few of the expenses that need to be considered:
Credit Card Debt
Credit card debt can fall on the name of any other person who might be on the account. This can even be another cardholder. Don’t disregard any calls you get from the collection company after your loved one has passed away. It’s very important to settle these debts as quickly as possible to stop the penalties from compounding. Most credit companies are heartless when it comes to these kinds of things, and their sole interest is to recover the balance on the cards.
Many states have a clause that prevents a mortgage company from going after a family member of a deceased. Unfortunately, if there’s somebody else on the loan then the responsibility can fall on them. Speaking with the mortgage company as quickly as possible after the death can help eliminate any complications.
The payments on a loan can sometimes fall to a co-signer if another plan isn’t specified in the loan agreement. Some loans have a death clause that prevents them from collecting on the day after the primary responsible party has passed away. This is often the case with car loans.
