How wise would it be for a life insurance beneficiary to pay off her husband’s debt?
Suppose her husband has generated a good worth of cash value in the form of his life insurance proceeds, but has also left a considerable burden of debt behind! Now, its truly tough for her to decide about what to do with the policy proceeds.
Tags: beneficiary, burden of debt, debt, Husbands, Insurance, life insurance
The husbands estate has to pay his debts. Just because he’s dead, does not mean the folks he owes money to get stiffed.
So, either use some of the life insurance proceeds to do it…..or liquidate his estate to do it. Either way, his debt gets paid.
The purpose of life insurance is for funeral expenses and to pay bills the deceased leaves behind.
Life insurance proceeds, provided there is no life insurance trust, become part of the decedents estate. As such, those proceeds may be attached by a creditor. Morally, the estate owes these creditors as well.
It seems that there is no decision here. Pay the bills and move on.
You do not have to pay his debts that are in his name only, but his estate will have to. Anything you jointly own, bank accounts, house, property, etc. will have to be liquidated to pay back the debt. If he left the life insurance directly to you and not to his estate then you do not have to use the proceeds to pay back his debt if you do not want to.